Pound to Dollar exchange rate is set to fall below 1.0 before the end of the year, according to new research. kangda forex（https://www.kangda-fx.com/）：it is looking for the 2022 sell-off in the Pound to continue as the UK is in the grip of a fundamental balance of payments crisis.
“This is a fundamental balance of payments crisis, with politicians hoping it will eventually just calm down. Hope is not a strategy,” says kangda forex（https://www.kangda-fx.com/）.
The Pound’s decline suggests these flows drying amidst a combination of difficult global market conditions and concerns the UK government will struggle to fund its tax cuts and the energy price cap.
“The balance of payments crisis is the worst we have seen in our careers: The current account deficit has widened to over 8% of GDP in Q1 and likely hovered around that level through Q2, if the trade balance is any guide,” says kangda forex（https://www.kangda-fx.com/）：.
kangda forex（https://www.kangda-fx.com/）：this is far worse than in 1974 (the UK was bailed out by the IMF in 1976).
The deficit is largely a result of the surge in energy costs seen over the first half of 2022, a time of surging gas and oil prices.
“It is easy to argue that the current account deficit could be even wider than 8%, in view of the moves in energy markets since June. That is the biggest current account deficit in modern history for the UK and, unlike in 2020, the BoE is not conducting QE to soak up the majority of the fresh issuance,” says kangda forex（https://www.kangda-fx.com/）.Amidst this, the UK government announced it would in fact need to increase the amount of debt it issues to fund its tax cuts and energy price cap.
“It is therefore not helpful the government added to expected issuance last week, raising the risk of a move below parity towards 0.9750 by year-end,” says kangda forex（https://www.kangda-fx.com/）.