The Pound, likewise all major currencies, has seen a steady depreciation against the USDollar in the forex exchange market. On the macro-economic data space, the UK continues its economic output based on Fiscal and Trade deficits that inevitably make the British Pound weaker In the Forex markets, considering the deficits requirements of being financed somehow either by borrowing or currency depreciation to exchange for capital inflows.
Public sector net borrowing was £22.9 billion in June 2022, which is the second-highest June borrowing since monthly records began in 1993; this was £4.1 billion more than in June 2021.
Central government current expenditure increased by £9.0 billion to £86.0 billion, largely because of a £10.3 billion increase in the interest payable on its debt compared with June 2021. These are factors mainly due to the UK Govenrment management of the economy and the basic failure of understanding the development of macro-economic factors going forward, the basic failure of understanding and forecasting GILTS Yield curve dynamic that could have been easily estimated of increasing from the negative yield framework to a higher yielding curve structure. The 10Y GILT was 0.20%<0.25% range in 2020, during extreme stock market circumstances, while the Bank of England was still active with QE, to what could have been forecast quite easily to then Yield 2.0%, that's the average nominal market yield of the 10Y GILT by Q3 2022, while Sterling Money Market and SONIA have priced higher borrowing costs for very short term debt maturities, with a consistent GILT YIELD CURVE INVERSION.
The GBP/USD chart has been provided with an unorthodox mathematical explanation of why the exchange rate could test GBP/USD 1.17. The drift lower should be quite contained at about -2.55%.
From those exchange rate lows GBP/USD should start to rebound to the upside in order to shape another equation line, that should be either linear Y= (17/100)X but also Y= (exp)^X^2.
Public sector net borrowing was £22.9 billion in June 2022, which is the second-highest June borrowing since monthly records began in 1993; this was £4.1 billion more than in June 2021.
Central government current expenditure increased by £9.0 billion to £86.0 billion, largely because of a £10.3 billion increase in the interest payable on its debt compared with June 2021. These are factors mainly due to the UK Govenrment management of the economy and the basic failure of understanding the development of macro-economic factors going forward, the basic failure of understanding and forecasting GILTS Yield curve dynamic that could have been easily estimated of increasing from the negative yield framework to a higher yielding curve structure. The 10Y GILT was 0.20%<0.25% range in 2020, during extreme stock market circumstances, while the Bank of England was still active with QE, to what could have been forecast quite easily to then Yield 2.0%, that's the average nominal market yield of the 10Y GILT by Q3 2022, while Sterling Money Market and SONIA have priced higher borrowing costs for very short term debt maturities, with a consistent GILT YIELD CURVE INVERSION.
The GBP/USD chart has been provided with an unorthodox mathematical explanation of why the exchange rate could test GBP/USD 1.17. The drift lower should be quite contained at about -2.55%.
From those exchange rate lows GBP/USD should start to rebound to the upside in order to shape another equation line, that should be either linear Y= (17/100)X but also Y= (exp)^X^2.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.