2023-10-26 10:39:45
Sterling fell to a three-week low on Thursday following a raft of economic data confirmed views that the Bank of England (BoE) is likely to hold rates on hold at its next policy meeting. next week.
Sterling is heading for a third straight day of decline, losing 0.2% to $1.2090, following briefly hitting its lowest level since October 4.
Faced with a weakened euro, it hit a low of almost a week before stabilizing at 87.25 pence.
“I attribute the latest weakening to dovish comments from the BoE, weaker than expected UK data and markets increasingly pricing in the risk of a further hike and therefore the conclusion of the hike cycle,” Kirstine said Kundby-Nielsen, analyst at Danske Bank.
The pound has lost more than 6% once morest the US dollar over the past three months.
Data released on Tuesday showed the jobs market easing, while the quick reading of the S&P Global UK Purchasing Managers’ Index (PMI) for the services sector fell in October to 49.2, the highest reading lowest since January.
Although inflation unexpectedly held at 6.7% in September, the highest rate of any major advanced economy, the BoE is expected to leave rates at 5.25% on November 2, according to the vast majority economists polled by Archyde.com.
Money markets now believe that there will be no further rate increases and that rates will be lowered as early as June next year.
In an interview with the Belfast Telegraph published on Friday, BoE Governor Andrew Bailey said inflation data for September, which did not fall as most economists had expected, were not very far from the expectations of the central bank.
In confirmation of the weak economy, British retailers on Thursday reported their worst October in terms of sales volume and expect another difficult period in November as households face the rising cost of life, according to a survey by the Confederation of British Industry (CBI).
“The weakness of the CBI investigation has highlighted the headwinds facing consumers in the UK,” said Jane Foley, head of foreign exchange strategy at Rabobank.
“Going forward, the UK and Eurozone are likely to experience a technical recession, suggesting that the potential for the pound to fall once morest the euro may be limited.
Sterling’s moves on Thursday also appear to be driven by a strengthening U.S. dollar ahead of U.S. GDP data due later, and weakness in the euro as the European Central Bank holds its policy meeting , Kundby-Nielsen said.
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