The Pound US Dollar (GBP/USD) exchange rate dropped as industrial action threatened to further rock the UK economy. The hospitality sector is braced for a difficult period of holiday trading amidst protracted rail strikes.
At time of writing the GBP/USD traded around $1.2174, a 0.28% drop from this morning’s opening levels.
The Pound (GBP) struggled for demand on Thursday in the face of rising economic pressures from continuous industrial action. A lack of major data left Sterling exposed to market sentiment and mounting domestic woes.
With the cost-of-living crisis rumbling on, widespread industrial action continues to impact the economy. As millions of workers struggle with falling wages and rising living costs, strikes are picking up pace and look to disrupt businesses in the lead up to Christmas. With rail strikes looming, hospitality businesses have seen a flood of party cancellations.
Restaurants and pubs are already facing skyrocketing energy prices and staff shortages, and in a time that is usually prosperous, strikes are threatening to wipe out more profits. Cancellation rates are soaring by 30% as people are struggling to make the journeys. Kate Nicholls, Chief Executive Officer of UKHospitality warned that the loss of business could cost the industry more than £1.5bn. Nicholls added:
Meanwhile, the US Dollar (USD) enjoyed moderate success against most of its peers on Thursday amid a shifting risk sentiment. 
Positive news out of China was let down by downbeat economic data, and with geopolitical risks escalating once more, safe-haven flows returned.
Weighing on global risk sentiment once again, are Russian President Vladimir Putin’s comments about the ongoing invasion of Ukraine. Putin warned that not only could the Ukraine conflict continue for quite some time, but also said the threat of nuclear war was rising. Putin added:
‘We aren’t about to run around the world brandishing this weapon like a razor.’
Looking ahead, the Pound US Dollar exchange rate could see further movement with the release of PPI inflation data for November. Despite signs of inflation finally cooling, which also poured cold water on further rate hike expectations, expected unchanged producer prices could tempt the Federal Reserve to push the interest rate higher.
Elsewhere, consumer sentiment is expected to improve modestly. An increase in consumer optimism could bring some modest support to the ‘Greenback’.
Meanwhile, the Pound will be left to trade on market sentiment and domestic issues amid a lack of data heading into the weekend. The ever-darkening economic landscape could continue to weigh on the Pound as businesses struggle with the cost-of-living crisis, compounded with increasing industrial action.
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