UK pound is struggling today, heading lower against its major counterparts. There is a lot weighing on the pound, from the fact that the London Olympics have failed to support home prices, to speculation that the yuan will undergo a great deal of depreciation during the rest of this year and possibly next year.
The UK pound is especially sensitive to the British housing market, and with the concerns over home prices, it is little surprise to see the sterling struggling. Some had hoped that the London Olympics would help support home prices, and help the pound, but that support hasn’t materialized. Instead, the British currency is facing a quandary as the government deficit widens, without the spending that might help stimulate the economy. Home prices remain somewhat depressed, and that isn’t helping, either.
Outside Britain, global economic concerns are also weighing on the pound. The Chinese Academy of International Trade and Economic Cooperation is reporting that the yuan could see major depreciation pressure. This is being seen as yet another indication that the Chinese economy is slowing more than many would like — and that China won’t soon be leading the global economy out of its doldrums. This news is likely to weigh on riskier assets, like the UK pound.
At 13:37 GMT GBP/USD is down to 1.5573 from the open at 1.5643. EUR/GBP is up to 0.8008 from the open at 0.7986. GBP/JPY is down to 124.0390 from the open at 124.3765.
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