Exchange houses in the United Arab Emirates have reported an increase in remittances to the United Kingdom after the pound sterling fell to its lowest level against the US dollar since July 2020, giving British residents a window of opportunity to take advantage of favorable exchange rates to send money home.

There has also been an increase in demand for physical books from people traveling to the UK who want to take advantage of cheaper spending, Hasan Al Fardan, managing director of Al Fardan Exchange, said on Thursday.

“We saw an increase in demand for remittances from British expatriates in the UAE when the pound broke through the 1.3000 level,” he said.

“British expats in the UAE will now receive more value in pounds for the same amount they pay in dirhams. Tourists started asking for more pounds in cash right after the relaxation of Covid-19 standards and much better prices.

The pound’s fall comes amid rising inflation, a cost-of-living crisis and growing speculation about a slowing UK economy, said David Madden, senior market analyst for the service provider. financiers Equiti Capital in London.

The pound’s most notable fall is against the US dollar, he said.

“The fact that the Bank of England has hiked rates three times since December 2021 and markets are pricing in more hikes also plays into the mix. If the cost of living were eating away at demand, a series of rate hikes would put more pressure on the economy, hence the bearish move in sterling,” Madden said.

GBP/USD consolidated just above 1.2500 overnight and fell to 1.2510 in Asia, said Jeffrey Halley, senior market analyst for Asia-Pacific at Oanda.

Since then, the currency pair hit 1.2561 at 11:45 a.m. UAE time on Thursday, according to Oanda.com.

“Selling EUR/GBP and buying GBP/YEN added some support for the pound today, but was not enough to trigger a late relief rally,” Halley said. .

“Any relief rally will be short-term as the broader technical chart now signals further losses at 1.2200 and potentially sub-1.2000 in the coming weeks.”

GBP/USD should recover the 1.3050 level to change its bearish outlook, he said.

Lulu Exchange saw a 5% increase in sterling remittance volume over the past week, said Thampi Sudarsanan, the exchange house’s deputy vice president.

“The current decline in the pound is due to the strength of the US dollar. The current support for the GBP/USD pair is around the 1.2480 level. The next support is around the 1.2350 and 1.2220 levels,” Sudarsanan said.

Meanwhile, Al Ansari Exchange reported a 10% increase in remittances to the UK this month, according to Rashed Al Ansari, Managing Director of Al Ansari Exchange.

Britain’s cost-of-living crisis, local inflation, the Russian-Ukrainian conflict as well as fears that China’s Covid-19 restrictions will hurt global growth are putting pressure on the weaker pound, said Mr Al Ansari.

“British expats can take advantage of this opportunity to pay off their debts and mortgages in the UK or increase their investments. This is also a good time to buy property or pay tuition fees in the UK,” a- he declared.

“Travellers planning to visit the UK this summer also tend to take advantage of exchange rates by buying pounds or loading them onto the multi-currency prepaid travel card.”

The pound is likely to slide to levels not seen since the early months of the coronavirus pandemic as there is at least a 50% chance of a recession in the UK, according to Standard Bank, the biggest asset lender from Africa, Bloomberg reported.

The comments come after the International Monetary Fund said Britain’s inflationary shock was the ‘worst of both worlds’ as it faces a tight labor market, as seen in the US, as well as the crisis energy in Europe.

The pound was already under pressure after a number of reports, including purchasing managers’ data and consumer confidence, suggested the UK economic recovery was faltering, Bloomberg said.

Meanwhile, the yen slipped to the closely watched level of 130 to the dollar on Thursday after the Bank of Japan stepped up its accommodative policy, saying it would make fixed-rate bond purchases every business day to defend its position. 10-year return objective.

The fall of the yen stimulated greater fluctuations in exchange rates: the dollar extended its rise and the euro fell with the pound.

“The risks of a dovish reassessment of BoE rate expectations and potentially some re-emergence of Brexit-related negative headlines continue to pose downside risks for the pound in the weeks ahead and a test of the 1 .2500 cannot be ruled out,” ING analysts said. in a research note.

Updated: April 29, 2022, 6:45 a.m.

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