The British Pound plunges after Scottish government announces plans for a new referendum about independence, UK labour market boosts good figures despite stalling economy, most factories in Shanghai to resume work and the crypto markets keep plunging with fears that a collapse might be contagious.
Scotland’s First Minister Nicola Sturgeon unveiled a new case for Scottish independence this Tuesday, arguing her government had mandate for a second independence referendum. In 2014, Scotland voted to remain in the United Kingdom, with 55% of voters wishing to remain in the Kingdom.
The news had a devastating impact on the British Pound with the currency losing over 1% against the Euro yesterday, reaching the lowest rate on GBPEUR since July 2021. The situation is even worse against a strengthening US Dollar, the Pound weakened by over 10% since January on the GBPUSD rate, reaching its lowest rate since March 2020. The UK is already set to be one of the slowest growing economy of the developed world this year and the Bank of England decisions on interest rates on Thursday will be key in managing inflation and supporting economic growth.
The United Kingdom labour market on the other hand is boosting strong numbers despite the economic situation with the unemployment rate remaining stable at 3.8%. The claimant count change came in lower than expected with over 19,700 less job seekers in May, against a forecast of over 49,000.
In China, the situation is improving with Shanghai authorities announcing that 96.3% of businesses have resumed work with a production rate of at least 70%. Parts of Shanghai and Beijing saw Covid outbreaks which led to restrictions and even a lockdown in Shanghai that forced the closure of many factories. The measures had a big impact on the Chinese economy which saw over a third of the economy affected, a number that fell to just 9% on Monday. Last month, industrial production increased by 3.3%, while the unemployment rate reached 5.9%, showing signs that the economic situation is improving with the restrictions lifted.
The crypto markets remain in fear of Celsius collapse, which could bring down other key players in the industry. The company already paused all account withdrawals on Monday, but with Bitcoin going under the $21,000 mark yesterday, the situation remains extremely fragile. Coinbase announced a plan to lay off 18% of its workforce as major losses see the cryptocurrency exchange platform brace for a global recession that drove down its stock price and crypto prices.
Cable saw the US Dollar strengthen again but news from the United Kingdom about a possible new Scottish independence referendum and a new Northern Ireland protocol saw the Pound plunge. GBPUSD opened at 1.2087 and close slightly under 1.1995.
GBPEUR followed a similar trend, as the pair opened at 1.1655 and closed to 1.1513.