How did the pound perform in August 2021 in comparison to last year?

Summer is a period in which the UK economy typically booms, boosted by tourism and large events like festivals. In 2020 however, this wasn’t the case.

Although some COVID-19 restrictions were eased in August 2020, to afford individuals with some freedom to enjoy the summertime, people were still unable to take part in mass gatherings and international travel was limited.

As a result, the economy began to recover. But this was short-lived, as transmission levels rose once more and lockdowns were enforced later in the year, in an attempt to curb them.

The health of the UK economy and the value of its currency are directly linked. Economic factors such as inflation, interest rates and exchange rates will all impact the foreign exchange market. Because of this, it’s important that you make use of online resources to learn more about forex trading and the factors that can affect prices, before you open a position in the market.

In this article we will look at the value of the pound from August 2020 to August 2021, assessing the difference in performance over time. Read on to find out how the currency has fared in the last 12 months.

August 2020

In August 2020, the government made the decision to further ease the lockdown restrictions that were in place across the UK. This meant that:

• Wedding receptions with up to 30 people could take place.
• Indoor, socially distanced performances could be held.
• Casinos, ice skating rinks and bowling lanes could open.
• Beauticians with the correct measures in place could reopen.
• Additional beauty and tattooing treatments, including facial treatments could be offered.

Some restrictions had already been eased prior to this, meaning many areas of the economy that had previously been completely dormant could reopen and trade. As a result of the economy gaining traction in these sectors, the monthly gross domestic product (GDP) rose by 2.1% — although this was still 9.2% lower than February’s pre-pandemic levels.

At this time, the pound had rebound from the lows that it had experienced in March 2020, when the pandemic first began to take hold in the UK. On 20^th August 2020 one pound could purchase you 1.31 dollars, in comparison to the 1.12 dollars that it could buy you in March of that year.

August 2021

Following the complete easing of lockdown restrictions on the 19^th July 2021, the UK was able to enjoy a far more normal summer period than we experienced in 2020. Many of us chose to go on ‘staycations’, making the most of what the UK has to offer, since international travel was still a bit of a grey area because of the traffic light system in place.

In this month, GDP rose by 0.4%, as Brits went out to restaurants and bars and in turn, fed the sectors that had long been starved by lockdowns. Despite the resumption of some form of normality, the Office for National Statistics (ONS) revealed that the UK’s economy was still 0.8% below its pre-pandemic level, proving that it would be a long road back to full economic health.

On the 31^st August 2021, one pound could purchase you 1.38 dollars, a fair increase on the previous year’s value. Of course, this is due to the fact that the UK economy could finally begin to gain some significant momentum, as lockdown restrictions were lifted and all sectors could reopen.

The value of the pound can be directly impacted by an array of factors and events. These events can be unprecedented, like the coronavirus pandemic, or planned, periodic affairs. Many planned events that could affect the forex market, like elections and changes in interest and exchange rates, are plotted in an economic calendar.

You can access an economic calendar online and use it to plan ahead, so that you can make better informed decisions with regards to your trades in the forex market.