GBP/USD: the pair hits a 10-month low

The pound recently had its worst day in a year as empty petrol pumps and food shortages worry traders. It fell to a 10-month low against the US dollar, and even better-than-expected GDP for the previous quarter couldn't stop the fall.

The trading week was full of stories from the UK, highlighting the shortage crisis facing the population. Endless queues at petrol pumps and empty food shops made the headlines.

While it is easy to blame the virus pandemic for the shortage crisis, the truth lies somewhere in between. It is true that the pandemic is causing severe supply bottlenecks. But the damage is also self-inflicted, as the fallout from the Brexit vote has shown.

In continental Europe, the shortages mentioned above do not exist. In addition, due to the new immigration law, the UK is facing a massive shortage of truck drivers (i.e. trucks), further fuelling the shortages.

Market participants reacted in the only way they knew how, by driving the pound down sharply and broadly.

Better-than-expected GDP data not enough to support the pound's decline
On Thursday, UK GDP data for the previous quarter was released. The results were much better than the market expected, with a 5.6% rise against the 5.0% expected.

However, despite this positive data, the pound has struggled to rebound. In September, it fell against all of its peers, hitting a 10-month low against the dollar. Even the Japanese yen, which has been generally falling recently, has risen against the pound.

With no change in sight, the pressure is likely to continue.