# Britain’s cost of living crisis sends sterling to lowest since mid-July Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-08-22 Category: TRADING Category URL: https://financedigest.com/category/trading Meta Title: UK sterling hits lowest level amid cost of living crisis Meta Description: Find out why Sterling is at its lowest level since mid-July against the dollar amid surging energy costs and UK economic concerns. URL: https://financedigest.com/britains-cost-of-living-crisis-sends-sterling-to-lowest-since-mid-julyhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-08-22t120246z2lynxmpei7l0etrtroptp4britain-sterling-1736815408400-compressed.jpg) By Joice Alves LONDON (Reuters) – Sterling fell to its lowest since mid-July against the dollar on Monday as surging energy costs and a summer of strikes highlighted the UK cost of living crisis and intensified fears for further economic slowdown. Amid worries around Britain’s surging inflation and declining economy, sterling recorded its biggest weekly fall against the U.S. [dollar since](https://www.financedigest.com/dollar-retreats-headed-for-biggest-weekly-loss-since-mid-january-bitcoin-down.html "Dollar retreats, headed for biggest weekly loss since mid-January; bitcoin down") September 2020 on Friday. By 1105 GMT, it was down 0.3% at $1.1798 after briefly falling to $1.1785, its [lowest level since](https://www.financedigest.com/uk-mortgage-approvals-hit-lowest-since-june-2020.html "UK mortgage approvals hit lowest since June 2020") July 14. Against a weakening euro, sterling held at 84.82 pence, edging 0.1% higher on the day, after [falling to a near four-week low](https://www.financedigest.com/dollar-falls-to-nine-month-low-as-powell-notes-progress-in-disinflation.html "Dollar falls to nine-month low as Powell notes progress in disinflation") against the single currency on Aug. 19. The weak UK [growth outlook continues](https://www.financedigest.com/swedish-match-continues-to-see-strong-smoke-free-sales-growth.html "Swedish Match continues to see strong smoke-free sales growth") to weigh on the pound. News that Ofgem is set to announce on Friday that UK average annual [household energy bills](https://www.financedigest.com/44-of-uk-households-are-worried-theyll-have-to-foot-the-bill-for-net-zero.html "44% of UK Households are Worried They’ll Have to Foot the Bill for Net Zero") are likely to rise to more than 3,500 pounds ($4,128.60) reinforces the headwinds facing consumers,” said Jane Foley, head of FX strategy at Rabobank in London. Britain’s cap on domestic energy prices is expected to rise to over 4,200 [pounds a year](https://www.financedigest.com/commonenergy-mistakes-costing-homeowners-hundreds-of-pounds-each-year.html "Commonenergy mistakes costing homeowners hundreds of pounds each year") in January, up 230% on the year before, due to soaring wholesale costs and changes in the way the cap is set, analysts said in August. Strikes over pay at Felixstowe, the UK’s largest container port, highlighted issues surrounding the [cost of living crisis](https://www.financedigest.com/indefensible-uks-sunak-under-fire-over-response-to-cost-of-living-crisis.html "‘Indefensible’: UK’s Sunak under fire over response to cost of living crisis") and threatens to worsen the supply chain issues for UK companies, Foley added. SUMMER OF STRIKES Felixstowe staff became the latest workers to [strike in Britain as unions demand higher wages](https://www.financedigest.com/ita-airways-averts-strike-after-wage-increase-accord-with-unions.html "ITA Airways averts strike after wage increase accord with unions") for members. The squeeze on household incomes has already led to [strikes by the likes of rail and bus workers demanding higher pay](https://www.financedigest.com/in-inflation-hit-germany-massive-strike-over-pay-to-cripple-transport.html "In inflation-hit Germany, massive strike over pay to cripple transport") rises. [Money markets are pricing in another 50 basis point rate rise from the Bank](https://www.financedigest.com/marketmind-banks-are-leaking-money.html "Marketmind: Banks are leaking money") of England next month as the central bank seeks to smother surging inflation at 10.1% in July. \[IRPR\] An economist at U.S. bank [Citi said on Monday British consumer price](https://www.financedigest.com/4-for-the-price-of-1-what-you-can-buy-in-the-uks-top-northern-cities-for-the-price-of-a-london-pad.html "4 for the price of 1: What you can buy in the UK’s top northern cities for the price of a London pad") inflation is set to peak at 18% – nine times the BoE’s target – in early 2023. Benjamin Nabarro [raised his forecast](https://www.financedigest.com/centrica-names-obrien-as-new-cfo-raises-earnings-forecast.html "Centrica names O’Brien as new CFO, raises earnings forecast") once again in the light of the latest jump in energy prices. Consumer [price inflation](https://www.financedigest.com/ecb-survey-shows-rising-inflation-expectations-despite-energy-price-falls.html "ECB survey shows rising inflation expectations despite energy price falls") was last above 18% in 1976. In its August meeting, the BoE raised its benchmark interest rate to 1.75% from 1.25%, the sixth hike [since late 2021 and the biggest](https://www.financedigest.com/uk-firms-plan-biggest-pay-rises-since-2012-to-fill-staff-gaps.html "UK firms plan biggest pay rises since 2012 to fill staff gaps") in 27 years. It [warned of a recession](https://www.financedigest.com/the-recent-bank-of-england-meeting-the-biggest-rate-hike-recession-warning-and-the-fallout.html "The recent Bank of England meeting, the biggest rate hike, recession warning and the fallout") by the end of the year that could last until 2024. Official data also showed Britain borrowed more than expected in July, underscoring the challenge facing the country’s [next prime minister over how to provide more support to consumers](https://www.financedigest.com/britains-next-sees-lower-profit-in-2023-as-consumer-outlook-darkens.html "Britain’s Next sees lower profit in 2023 as consumer outlook darkens"). The [pound has weakened more than 3% in August against a strengthening dollar](https://www.financedigest.com/dollar-slips-after-upbeat-china-data-euro-pound-rise.html "Dollar slips after upbeat China data; euro, pound rise"), which has been supported by safe-haven flows. The UK currency is one of the [worst performers among G10 currencies this year](https://www.financedigest.com/europe-facing-its-worst-drought-in-500-years-study.html "Europe facing its worst drought in 500 years – study"). ![](https://www.globalbankingandfinance.com/wp-content/uploads/2022/08/Major-currencies-performance-this-year.jpg) ($1 = 0.8477 pounds) (Reporting by Joice Alves; Editing by Mike Harrison) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---