British pound

Sharp fluctuations of major currencies inject new uncertainty into fraught global economic outlook.

“Of course, central banks in other jurisdictions such as the UK have also been raising interest rates, and the eurozone is planning to do likewise. Europe is on the verge of a recession and the UK’s new government has stirred crisis talk with its fiscal stimulus adding to its current account deficit.” Higher energy prices will in turn push up the cost of other goods and services. Japan is the only G10 country not to raise interest rates. The issue with aggressively large interest rate hikes is that it’s likely to push the economy into a recession, which no one wants to see.” “These countries will either have to tax their economies more, issue inflationary local money or simply borrow more. “The US allies are also having serious struggles. “So with the war in Ukraine, economic and political problems in Europe, high inflation, etc, it is not surprising investors are turning to the US dollar.” “The US dollar has always been seen as a safe haven for investors because the US is such a strong and large economy, so if there is global uncertainty, it’s always a safe bet to hold US dollars because it retains value well,” Tien said. The first is confidence in the US economy relative to its peers. “The new prime minister’s economic policy of lowering taxes on the wealthy is not too popular, and the consensus is that it will not work in stimulating the economy.” As the British pound plummets in value, the US dollar is flying high.