Surge in UK remittances as pound sinks against US dollar

Exchange houses in the UAE have reported a surge in remittances to the UK after the British pound fell to its lowest level against the US dollar since July 2020, amid uncertainty over rising inflation.

Meanwhile, gold demand surged in the first three months of this year as investors sought to hedge against the impact of higher prices and increased geopolitical risks, the World Gold Council reported.

On Thursday afternoon, sterling was down 0.9 per cent against the dollar at $1.2429, after earlier hitting its lowest level since July 2020 at $1.2416, Reuters reported.

“We have seen an increase in demand for remittances from UK expats in the UAE when GBP broke the 1.3000 level,” said Hasan Al Fardan, of Al Fardan Exchange.

Lulu Exchange recorded a 5 per cent increase in the volume of sterling currency remittances over the past week, said assistant vice president Thampi Sudarsanan.

The fall in the pound follows growing speculation that the British economy will cool, said David Madden, of financial services provider Equiti Capital in London.

“Also playing into the mix is the fact the Bank of England has hiked rates three times since December 2021 and the markets are pricing in more hikes,” he said.

Global gold demand was up 34 per cent in the first quarter of 2022, driven by strong exchange-traded fund inflows, as investors sought safe-haven assets amid geopolitical and economic uncertainty, the World Gold Council said.

ETFs are a basket of securities consisting of stocks, bonds, commodities or other financial assets that track global markets.

“The first quarter of 2022 has been a turbulent one, marked by geopolitical crises, supply chain difficulties and surging inflation,” said the council’s Louise Street.

“These global events and market conditions have solidified gold’s status as a safe-haven holding, not just for investors, but also for retail consumers.”