STERLING tumbled below $1.34 for the first time since December during yesterday’s session, having been weighed down in recent weeks by UK economic weakness, reduced expectations of interest-rate rises and worries over Brexit.
The dollar was buoyed yesterday as fears of a trade war between the US and China receded.
Sterling was, at 5pm yesterday, trading around $1.3418, down 0.58 cents on its pre-weekend close in London. It dropped to an intra-day low of around $1.3389.
The pound was also weaker against the euro. The single currency was, at 5pm, trading around 87.68p, up by 0.32p on its pre-weekend close.
The Office for National Statistics published figures last month revealing the UK economy grew by just 0.1 per cent in the first quarter.
The Bank of England’s Monetary Policy Committee earlier this month held UK base rates at 0.5%, following a raft of weak economic data. This decision to hold rates coincided with the Bank cutting its forecast of UK growth this year from 1.8 per cent to 1.4%.
In early April, a rise in rates at this month’s MPC meeting had been viewed by some economists as a near-certainty. Financial market players have reviewed their rate-rise forecasts significantly in recent weeks because of the weak UK economic figures.
As well as economic weakness, worries over the impact of Brexit have also weighed on sterling, as the UK continues its protracted negotiations with the European Union. Michel Barnier, the European Union’s chief negotiator on Brexit, said last week that “little” progress had been made since March.
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