GBP/USD: Political and economic woes to weigh on the pound – Mizuho

According to economists at Mizuho Bank, The pound will move with a lack of direction at the start of September, though it will probably fall on the UK political and economic trends from mid-September onwards.

Several issues could attract attention and cause political turmoil

“There is the covid situation and the shortage of EU workers as a result of Brexit, for example. There is also the ‘pingdemic,’ with people having to self-isolate if they have been in contact with someone who contracted covid. These factors led to a labor shortage and logistical chaos in the UK this summer.”

“The furlough scheme (whereby the state pays of portion of wages in order to keep people in work) is set to wind down at the end of September.”

“This is not a problem for the UK alone, but there are concerns about the rapid spread of Covid-19 among young people. This is apparently due to the slow pace of vaccinations among young people, but there are concerns that schools could become a hotbed for infections when lessons resume.”

“Prime Minister Boris Johnson’s political base is shaky in the wake of the resignation of the health secretary Matt Hancock and the attacks by former special advisor Dominic Cummings, for example. This could potentially become an unstable factor for the pound.”