Sterling tanks, Dollar reigns supreme
Confidence in Sterling remained brittle as concerns for the economy and fears the Bank of England would not be able to enact aggressive rate hikes loomed like a dark cloud. With a series of aggressive rate hikes from the Federal Reserve and more hawkish rhetoric from the ECB, expectations that relative yields would move against the Pound, rose. In other words, more bang for your buck in Dollars or Euros so the Pound will sell off.
Brexit tensions increased with further UK threats to suspend the Northern Ireland protocol. Sterling slumped below 1.2300 to the Dollar after US inflation data beat expectations. A dip in risk appetite triggered another Sterling sell off to below 1.2250 to the dollar.
RICS housing data remained strong but UK GDP declined 0.1% for March with first-quarter growth held at 0.8%, below forecasts of 1.0%. Industrial output and trade data were also worse than expected. Sterling has dropped to 2-year lows below 1.2200 to the Dollar with the Euro at 7-month highs around 1.1608.