By Yasin Ebrahim
Investing.com – The pound surged against the dollar after clawing back early-day losses Tuesday, as the Bank of England suggested that the U.K. was on track for a stronger than expected rebound following its worst slump in more than 40 years in the first quarter.
rose 0.74%, to $1.2385.
U.K. gross domestic product declined 2.2% in the first quarter of 2020, its worst slump since 1979.
The Bank of England chief economist Andy Haldane was set for a V-shaped recovery but flagged rising unemployment as a growing threat to the recovery. “It is early days, but my reading of the evidence is so far, so V,” Haldane said.
“Today’s unexpected downward revision to GDP numbers came as the pound seemed on course for its fourth consecutive down week against its main peers, largely on concerns about the risk of the U.K. leaving it transitory membership of the EU’s single market at year end and shifting to trading on less-favourable WTO terms,” Action Economics said in a report.
The strong rebound in the pound comes despite little sign of progress on the latest post-Brexit talks.
EU Brexit negotiator Michel Barnier slammed Britain for choosing not to extend the deadline for the transition period that ends on December 31 and trying to keep as many single market benefits as it can while showing little compromise on key sticking points including the level playing field, security and fisheries.
The level playing field sets out what access the U.K. could have to the European single market after Brexit.
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