UPDATE 1-Sterling hits fresh 2021 low vs dollar, economy loses steam

- Advertisement -


(updates value, adds comment)

- Advertisement -

LONDON, Nov 11 (Businesshala) – Sterling fell to its 2021 low against the dollar on Thursday as the British economy appeared to be losing momentum and rising US inflation prompted the greenback that the Federal Reserve would raise interest rates sharply. Be expected.

- Advertisement -

Data released by the Office for National Statistics showed the UK economy grew by 0.6% in September, but estimates for previous months were revised lower, leaving the economy still smaller than in February 2020. .

IG Markets analyst Joshua Mahoney commented “the latest UK growth data has done little to help the pound at a time of weakness”.

- Advertisement -

Sterling fell to its lowest since December 2020 at $1.3365 and failed to recover through the session.

At 1614 GMT it was trading at $1.3385, down 0.13%.

In its November policy meeting, the Bank of England left its main interest rate unchanged at 0.1%, previously indicating it may raise it.

Markets are now pricing in a high probability of a December rate hike but uncertainty remains high. ,

ING market economist James Smith said he believed the slowing of the British economy was unlikely to have a major impact on BoE policymakers, for whom labor market recovery is a key priority.

“It is a close call between the December and February rate hikes, although we think the former is more likely – especially if the jobs figures bring good news to the committee”, he said in a client note.

Economists say a tighter monetary policy will boost the British currency.

“An expectation of a rate hike and final delivery should allow Sterling to recoup its recent losses,” said Dean Turner, economist at UBS Global Wealth Management. Currency derivative markets are anticipating further weakness for the pound, with the cost of options to protect against further declines at its highest level since the 2016 Brexit referendum.

Versus the euro, the pound was down 0.1% at 85.66 pence.

The post-Brexit dispute between the UK and the European Union over trade with Northern Ireland is also worrying investors.

Ireland’s foreign minister said on Thursday that comments from Britain’s Brexit minister showed there was still time to find a solution to trade difficulties before Britain scrapped some of its post-Brexit arrangements.

Reporting by Julian Ponthas; Editing by Gareth Jones and Andrea Ricci

,

- Advertisement -

Stay on top - Get the daily news in your inbox

DMCA / Correction Notice

Recent Articles

Related Stories

Stay on top - Get the daily news in your inbox