GBP price, news and analysis:
- News reports have suggested that a shortage of heavy goods vehicle (HGV) drivers in the UK is disrupting supplies to restaurants and supermarkets.
- That could delay an eventual tightening of monetary policy by the Bank of England and thereby weaken GBP long term.
GBP/USD at risk
News reports that UK restaurants and supermarkets are running out of supplies could be long-term negative for the British Pound if it delays the eventual tightening of monetary policy by the Bank of England.
McDonald’s, for example, said Tuesday that it has run out of milkshakes and some bottled drinks, adding that “a number of issues are impacting retailers in the UK at the moment, one of which is the nationwide shortage of HGV drivers.” Last week Nando’s closed some outlets after running out of chicken and the Co-op chief executive has reportedly said that food shortages are the worst he has ever seen.
Near-term there is no reason for this to lead to GBP weakness but any signal from the Bank that it is concerned about a weaker than previously expected outlook for the UK economy could lead to a longer-term slide in the currency, which is currently stable above the important 1.37 level.
GBP/USD Price Chart, One Hour Timeframe (July 29 – August 25, 2021)
Source: IG (You can click on it for a larger image)
Note, however, that both the US and Germany have problems too. In the US, the spread of the delta variant of Covid-19 has reportedly led to Goldman Sachs reversing its back-to-office stance after deciding that all staff must be vaccinated to enter its US workplaces or work from home.
In Germany, the Federal election on September 26 is starting to come into focus after opinion polls suggesting that the SPD Social Democrats have taken the lead from Chancellor Angela Merkel’s Christian Democrats (CDU).
Again, neither of these developments should affect FX near term but could well be an influence further ahead.
— Written by Martin Essex, Analyst
Feel free to contact me on Twitter @MartinSEssex