September 20, 2021

Bad Pound Currency! What happened?

 Concerns over rising gas prices have added to the burden on pound currency trading, which has also come under pressure from the strengthening US dollar.

Over the weekend, Business Secretary Kwasi Kwarteng reportedly held discussions with senior executives from energy companies to find out the extent of the widespread price increases on companies and households.

Among the causes that are said to have driven this increase are high global demand and maintenance problems at some production locations.

As a result, at least five small supplier companies have gone bankrupt in the past five weeks and industry sources expect four more to suffer the same fate before the end of this month, according to The Guardian.

High gas prices will also result in a slowdown in UK steel mills and the chemical industry, thus posing a threat to the carbon dioxide (CO2) -based food industry.

Even so, Prime Minister Boris Johnson says the surge in gas prices is a temporary problem caused by the global economic resurgence from the coronavirus outbreak, where overwhelming gas demand from Asia has affected supply in the UK.

He also expressed his confidence that the supply chain in the UK would recover and would work with gas companies to ensure consumer needs were met.

The pound plunged to a nearly one -month low, trading lower at around 1.3660 against the US dollar. The Bank of England (BOE) policy meeting on Thursday will also be the focus of investors who are expecting a policy change from the central bank.