May 12, 2022 09:58AM ET
By: AnalysisWatch
The pound-US dollar (GBP/USD) exchange rate slipped after falling to a two-year low today. A larger-than-forecast decline in the UK's gross domestic product in March likely triggered the drop in the exchange rate amid the gloomy outlook for the country's economy. Fears over the UK's aggressive stance on the Northern Ireland Protocol may also have contributed to the currency pair's decline.
At the time of writing, the GBP/USD exchange rate is at around $1.2206, down around 0.2% from this morning's open.
The pound (GBP) is benefiting from low-risk market sentiment today, which has allowed it to advance against many of its peers. The pound is still struggling against the U.S. dollar (USD) today after a larger-than-forecast decline in gross domestic product (GDP).
The UK economy contracted in March amid the country's cost of living crisis. Consumers were found to be spending less on major purchases and also less on fuel as gasoline prices have skyrocketed.
The drop has increased pressure on the U.K. government to take action to prevent the country from falling into an early recession.
Threats from British ministers regarding the Northern Ireland Protocol may also weigh on GBP today.
British Foreign Secretary Liz Truss appeared to threaten today that the British government was prepared to unilaterally suspend the agreement. Maros Sefcovic, the EU's chief negotiator, said such a move was "simply not acceptable."
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