The Pound reached a six-week high versus the US dollar (GBP/USD) on Friday, despite warnings about a no-deal Brexit from Bank of England (BoE) Governor Mark Carney.
Bank of England’s (BoE) Carney Warns Over Brexit Recession and Housing Price Slump
The central banker suggested the impact of Britain leaving the EU without a deal could be similar to that of the Global Financial Crisis (GFC) in 2008, with the potential for house prices to drop by around a third. US Dollar weakness has been a theme this week, and with markets confident the UK and EU will reach a deal, sterling has had the opportunity to regain some ground.
So far in Friday’s session, the Pound to US Dollar (GBP/USD) exchange rate has reached highs of 1.3138, while the sterling to euro (GBP/EUR) currency pair has hit levels of 1.1222. Both the Euro and Pound have been able to recover some losses against the US Dollar after Stateside inflation readings showed a surprising slip. Additionally, trade war concerns with China are also a source of concern for those investing in the US Dollar.
BoE’s Carney Warns on China and Economic Crisis
BoE Chief Carney had comments on China too, saying:
‘One of the bigger risks for the global economy are developments in China. China is a great source of growth in the global economy, an economic miracle — lots of positives. At the same time, their financial sector has developed very rapidly, and it has many of the same assumptions that were made in the run-up to the last financial crisis.’
The Canadian banking mogul continued to say that there’s the potential for a crisis similar to that of the Lehman Brother’s collapse in the States just ten years ago.
‘Could something like this happen again? Could there be a trigger for a crisis–if we’re complacent, of course it could.’
While British banks are better prepared for a crisis, the prospect of another economic collapse could be a thought to scare markets moving forwards should the possibility become more prominent.
Interbank highs today:
GBP/USD – 1.3138
GBP/EUR – 1.1222
GBP/AUD – 1.8263
GBP/NZD – 1.9951
GBP/CAD – 1.7071
GBP/ZAR – 12.4704
GBP/CHF – 1.2676