The British Pound (GBP), which was once the world’s reserve currency, plummeted to an all-time low against the US Dollar (USD) on Monday and closed at $1.036. When the EUR/USD pair dropped to $0.95540 USD per EUR, one of the lowest values in history, something similar happened to the Euro. The price of Bitcoin (BTC) is unchanged at $19,000.
New All-Time Low for the British Pound (GBP) Against the US Dollar
This morning, the British pound was mentioned in every headline as it descended toward its all-time low. This follows the budget announcements made by the incoming prime minister on Friday. The GBP returned to $1.07 despite this rapid loss, however analysts believe that this may soon reverse as the GBP may reach parity with the USD.
According to Nomura, the British pound could drop further in the near term, reaching $0.975 by year’s end and $0.95 in the first quarter of 2023.
Jordan Rochester, a Nomura research analyst, earlier today wrote:
Politicians are expecting that the core balance of payments situation will finally be resolved. Markets are reflecting the fact that hope is not a strategy.
Some have even compared the GBP to Terra (LUNA), a stock that fell earlier this year and eventually hit $0, having an impact on investors all across the world.
Today, Bitcoin (BTC) held steady around $19,000, declining 0.3% over the previous 24 hours. Considering how much more volatile cryptocurrencies are generally, this is a surprisingly stable day for them. Other cryptocurrency with relatively small volatility include Litecoin (LTC) and Ethereum (ETH).
It is important to demonstrate that despite the present market upheaval, which has impacted some of the biggest and oldest currencies in the world, BTC has remained comparatively steady. This most recent volatility, which may continue in the near future if central banks don’t act right away, has had a significant impact on the FX market.
In response to the large repricing of the pound and other financial assets, the Bank of England announced that it is closely monitoring financial market developments. Market participants think that in order to stabilize the pound and restore investor confidence, the Bank of England (the country’s central bank) may increase interest rates aggressively in the upcoming days.
Italian Elections Are Won by Meloni, EUR Drops to $0.955
Giorgia Meloni’s victory in an important Italian election on September 25 has also had an impact on the euro this morning. On September 26, the Eurozone’s common currency dropped to $0.9553 per USD. It has maintained around $0.9618 despite a brief recovery to $0.97.
Given that the recent movement in the EUR is a part of a longer market decline that began many months ago with the EUR hitting parity with the USD, the impact of the elections has been rather muted.
The EUR and GBP will eventually rebound, but the Italian elections could have a bigger impact on the EU, which could lead to additional turmoil if Meloni sever relations with the common block.
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