# Sterling struggles to pull away from March 2020 low Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-07-15 Category: TRADING Category URL: https://financedigest.com/category/trading Meta Title: GBP struggles near two-year lows amid recession fears and Meta Description: Stay updated on the latest news about the struggling British pound against the dollar amidst economic concerns and political instability in the UK. URL: https://financedigest.com/sterling-struggles-to-pull-away-from-march-2020-lowhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-07-15t091857z1lynxmpei6e0burtroptp4britain-sterling-1736815582313-compressed.jpg) By Lucy Raitano LONDON – A depressed British pound struggled for direction against the dollar on Friday, staying near more than two-year lows as nagging recession fears and political uncertainty weighed on sentiment. The pound was up 0.08% to $1.18350,, but wasn’t far off a low of $1.1761 hit on Thursday – its lowest since March 2020. Sterling was [largely flat against the euro](https://www.financedigest.com/euro-zone-current-account-deficit-widens-again-on-large-energy-bill.html "Euro zone current account deficit widens again on large energy bill") at around 84.76 pence. Major currencies have come under pressure this week as traders, increasingly [fearful of a recession](https://www.financedigest.com/oil-settles-below-90-as-recession-fears-mount.html "Oil settles below as recession fears mount"), fled to the safe-haven dollar which is at a two-decade high. But the pound faces additional headwinds given a strong [economic slowdown in the UK coupled with domestic political uncertainty](https://www.financedigest.com/combatting-economic-uncertainty-in-2023-with-the-payments-sector-2.html "Combatting economic uncertainty in 2023 with the payments sector"). With no clear frontrunner to take over from current Prime Minister Boris Johnson, there are concerns over future [economic policy and in particular the approach to Brexit](https://www.financedigest.com/the-politics-economics-and-investment-implications-of-brexit.html "The politics, economics and investment implications of Brexit") and the Northern Ireland protocol. The five remaining [contenders to be Britain’s next prime minister will go head to head in the first of three televised debates](https://www.financedigest.com/five-contenders-to-be-next-uk-pm-to-face-off-in-tv-debate.html "Five contenders to be next UK PM to face off in TV debate") on Friday. Though set for a 1.7% weekly drop against the dollar, the pound was supported this week by [hawkish signals from the Bank of England and unexpectedly positive UK GDP data](https://www.financedigest.com/stocks-sag-as-hawkish-fed-cools-china-rally-awaits-us-jobs-data.html "Stocks sag as hawkish Fed cools China rally; awaits US jobs data"), according to Simon Harvey, head of FX Analysis at Monex Europe. He added that pound performed roughly in line with the Australian dollar, Norwegian Krone and just a bit better than the [Japanese Yen](https://www.financedigest.com/japanese-yen-gains-as-ueda-set-to-be-named-next-boj-governor.html "Japanese yen gains as Ueda set to be named next BOJ governor"). The [significant declines over the week](https://www.financedigest.com/significant-savings-stratford-apartment-one-week.html "Significant savings on Stratford apartment for one week only") … is due to the fact that the [economic outlook is very bleak at the moment despite the GDP data](https://www.financedigest.com/big-data-suggests-leicesters-football-success-could-usher-in-economic-boom.html "Big data suggests Leicester’s football success could usher in economic boom") out mid-week,” Harvey said. UK economic output expanded by 0.5% in May, although [consumer services fell as the surge in inflation hit](https://www.financedigest.com/uk-consumer-mood-hits-one-year-high-but-financial-gloom-persists.html "UK consumer mood hits one-year high, but financial gloom persists") shoppers. A [Reuters poll](https://www.financedigest.com/bank-of-england-to-raise-rates-by-50bps-again-to-tame-inflation-reuters-poll.html "Bank of England to raise rates by 50bps again to tame inflation: Reuters Poll") of economists had pointed to zero growth in May from April. The [Bank of England is grappling with soaring inflation and a cost-of-living crisis](https://www.financedigest.com/how-the-2023-banking-crisis-unfolded.html "How the 2023 banking crisis unfolded"), having raised rates five times since December as it tries to stop the surge in inflation from becoming embedded in Britain’s economy. Then you overlay political volatility on top of that, and the idea that fiscal [stimulus may not necessarily be too supportive to the kind of environment for bringing down inflation and lifting](https://www.financedigest.com/european-shares-rally-as-china-stimulus-lifts-recovery-hopes.html "European shares rally as China stimulus lifts recovery hopes") growth,” Harvey added. Therefore it is very difficult to warrant [holding sterling](https://www.financedigest.com/sterling-holds-firm-after-uk-jobs-data-muddies-rate-outlook.html "Sterling holds firm after UK jobs data muddies rate outlook") from an FX perspective. (Reporting by Lucy Raitano; Editing by Mark Potter) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---