GBP falls to 1.20 against the US Dollar amid British government uncertainty

FXOpen

The British Pound slid once again during the early hours of this morning to 1.20 against the US Dollar, signaling a return to the low point that it reached last week.

This morning's slump for the British Pound takes place during a time at which the current British government is in turmoil, with two senior ministers having resigned from their positions during the late hours of yesterday.

Rishi Sunak, the Chancellor of the Exchequer (Finance Minister) resigned, as did his colleague Sajid Javid, who had until yesterday held the position of Secretary of State for Health and Social Care.

This has raised a lot of speculation within the United Kingdom regarding the longevity of the current government, and whether prime minister Boris Johnson will follow suit, or whether he will hang onto his position until potentially ousted by his own party.

Either way, there is a reflection on the policies implemented over the past two years by the current government, including the fiscal policies of Rishi Sunak who has now made for the hills. Those included furlough schemes, which paid people to stay off work and comply with lockdowns, at great cost to the taxpayer and overall economic growth.

The blame for the cost of living crisis which is currently ongoing within the United Kingdom, and the increasing interest rates to curb inflation that is at a 40 year high is being laid at the door of the government, and therefore all eyes are on the next move from within Parliament.

Confidence in the British Pound this morning is therefore low, as it is very difficult to gauge whether the current government will soldier on, or whether an election may be called.

Meanwhile, the US Dollar continues its strong dynamic despite inflation levels in the United States being at their highest level in 40 years, and multiple interest rate increases by the Federal Reserve bank, and the Euro lags only marginally behind the US Dollar, with the European Central Bank having only made one interest rate rise during this period of high inflation across the Western world.

It is a volatile period as far as geopolitical activity is concerned, and the value of the GBPUSD is a clear demonstration of where the current market confidence lies.

Overall, Britain's economic situation is very stable, and perhaps more so than that of the United States on a very general level, but the policies and confidence in the current administration on both sides of the Atlantic is waning fast, with some of Britain's top ministers taking their final paychecks first.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

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