Struggling sterling set to tumble below $1.20

The pound is set to fall to its lowest level against the dollar since the pandemic crash and could slip below $1.20 soon, a currency expert warned.

Olivier Korber, strategist at French bank Societe Generale, said sterling is ‘struggling’ against the dollar as the UK’s grim economic outlook pales against the US’s more robust state of affairs.

The pound is trading at $1.22 against the US dollar but Korber says it is at risk of falling below $1.20 ‘in the very near term’ – and there is room for more bets against the pound.

Grim outlook: The pound is trading at $1.22 against the US dollar but the UK’s grim economic outlook pales against the US’s more robust state of affairs

The UK is staring down the barrel of a year-long recession with the economy set to shrink until the end of next year.

The Bank of England has had to raise interest rates at its fastest rate in 27 years – its sixth hike since late last year – to combat red-hot inflation of 9.4 per cent.

With interest rates at 1.75 per cent and inflation predicted to soar above 13 per cent, the outlook for Britain is worrying analysts.

GDP figures released today are expected to show the economy getting worse.

The US, on the other hand, is now quashing talk of a recession after unexpectedly positive job figures last Friday. 

The unemployment rate is at its lowest level in half a century as 528,000 jobs were added in July, more than double what economists expected.

Inflation is also cooling, data this week showed. The US consumer price index rose by 8.5 per cent year on year in July versus a year ago – less than expected – which was partly due to a drop in petrol prices.