GBPUSD Analysis: British Pound Flying High Against US Dollar as King Charles Crowned
For those members of the British public who support the long tradition of hereditary monarchy, either visiting many of the public celebrations or spending long periods of time observing the televised coverage would have been activities that carve themselves into the memory for years to come.
For those who are less than keen on having a hereditary peer as head of state, either total removal from the famous royal pomp and circumstance would have been likely, or in some cases, arriving in numbers to display their republican viewpoints in public.
Either way, the coronation of King Charles represents a new era for the United Kingdom, which has recently waved goodbye to an era in which Queen Elizabeth had reigned for just a few months over 70 years.
For the pragmatic among us, the events of the weekend, which celebrated the crowning of King Charles, could be regarded as a time to reflect on what an incredibly different world and economy we all live in today compared to the day in 1953 when Elizabeth became Queen of England, Great Britain, and the Commonwealth.
President Joe Biden and US First Lady Dr. Jill Biden have been spending time in the United Kingdom during the coronation period, and many informal discussions between British government officials and the Bidens have been publicized, with the usual reiteration of the strength of the partnership between the two countries.
The economic challenges that exist on both sides of the Atlantic rumble on, however, and Charles heads to the throne at a time during which a serious cost of living crisis exists in the United Kingdom and has done for approximately two years now.
Inflation in the United States has been decreasing and is now at around 6%, whereas in the United Kingdom, it is still well into double figures, along with many nations in Western Europe.
However, despite concerns being raised over the lavishness of the coronation at a time during which many British people have been tightening their belts, the British pound has been performing extremely well.
On Friday, the day before the coronation ceremony took place, the pound soared against the US dollar, heading to the high 1.26 range before the end of the business day in Britain. The pair is still higher than at any period over the last week, and it’s the second highest value against the US dollar in a month.
Over the course of the 12-month moving average, today’s value for the British pound is actually the highest in the entire period of one year.
That is remarkable considering that the majority of mortgage borrowers have to pay around 4% interest, whereas last year it was less than 1%, and the extremely high cost of energy products such as domestic electricity and heating services.
Food inflation and wage depreciation have been significant issues. However, despite all of these factors, which led to the depreciation of the British pound over a long and steady period last year, the GBP is performing in a stellar fashion at the moment.
Volatility between these two majors is relatively rare; however, over the past few days, it appears that the relationship between the GBP and USD this week is as entertaining as that between those who are in favor of the monarchy and those who are not.
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.
Text source: Forex Trading Blog
