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Sterling up against the dollar and euro despite UK slowdown

By Angela Barnes

11:54, 23 December 2021

One pound coin on fluctuating graph showing rate of sterling
UK pound strengthened against both the US dollar and Euro despite news of sluggish economic growth in the third quarter – Photo: Shutterstock

Sterling was up 0.4% on the US dollar, 0.4% on the Euro, and 0.5% on the Japanese Yen on Thursday morning – despite Britain’s economy growing more slowly than expected in the July-to-September period this year.

The UK’s third-quarter GDP was revised downwards from 1.3% to 1.1% on Wednesday, with the Omicron Covid-19 variant posing a further threat to Britain’s recovery this year.

The ONS also revealed on Wednesday that UK GDP was now 1.5% below where it was pre-coronavirus in the fourth quarter.

Pre-Christmas trading

While the pound was one of the better performing major currencies in the final week of trading ahead of Christmas, some analysts think it might be in store for a setback in the year with economic risks leading to market doubt.


1.09 Price
-0.030% 1D Chg, %
Long position overnight fee -0.0080%
Short position overnight fee -0.0002%
Overnight fee time 22:00 (UTC)
Spread 0.00006


0.66 Price
+0.040% 1D Chg, %
Long position overnight fee -0.0071%
Short position overnight fee -0.0011%
Overnight fee time 22:00 (UTC)
Spread 0.00006


148.65 Price
-0.010% 1D Chg, %
Long position overnight fee 0.0111%
Short position overnight fee -0.0194%
Overnight fee time 22:00 (UTC)
Spread 0.010


0.66 Price
+0.040% 1D Chg, %
Long position overnight fee -0.0071%
Short position overnight fee -0.0011%
Overnight fee time 22:00 (UTC)
Spread 0.00006

“Although PM Johnson is holding off from announcing more stringent measures after his roll-out of ‘Plan B’ earlier in the month, many large organised events have been cancelled in the UK and the hospitality sector is suffering as people choose to stay away,” Jane Foley, head of FX strategy at Rabobank, said in a research note.

“In our view the market has still priced-in too many BoE rate hikes for 2022. We anticipate that these will be partly unwound in the coming months and that this could weigh further on the pound,” Foley added.

Read more: Vaxzevria significantly boosts antibody levels against Omicron

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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