The pound sterling has been experiencing enormous pressure by surging inflation, a looming recession, questionable political nominations following the departure of Queen Elisabeth and concerns that tax cuts and increased public spending under a new government could exacerbate price pressures. As of afternoon Friday September 16 the British currency dropped to 1.1378 against the greenback, and there is no end in sight.

The British currency, down more than 15% against the dollar so far this year, represents a big challenge for the Bank of England since it increases the cost of imports and can cause more imported inflation. Technically speaking, the sterling right now is in free fall against the greenback. In this regard, analysts at JPMorgan Chase in their recent flashnote expressed an opinion, that in addition to favorable seasonality in Q4, the continued strengthening of the dollar was further boosted by “unexpectedly favorable” data from the U.S., concerns about financing the growing double deficit of Europe and the UK, deepening weakness in Asian exports and signs of dollar cash shortage.

Soaring real dollar yields and the steadiness of the U.S. currency gains support a scenario of further aggravation for the pound. Furthermore, JPMorgan recommends staying short on the euro, pound and kiwi against the U.S. dollar for the time being, adding that the desperate actions of both ECB and BoE are not capable of solving regional problems.