Sterling Hits 2 Year Low
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- July 10, 2019
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Sterling fell towards its lowest levels in more than two years on Tuesday against the backdrop of a worsening economic outlook and rising fears about a no-deal Brexit and a new Prime Minister.
With a key US$1.25 level against the dollar giving way in early Asian trade, traders quickly pushed the British currency down half a per cent against the dollar to a level not seen since April 2017, barring a flash crash in early January.
The pound also weakened against the euro to a six-month low and is on track for a 10th consecutive week of losses against the single currency.
In the latest sign of economic weakness, sales at British retailers rose at their slowest average pace on record over the past year, a survey from the British Retail Consortium showed.
Concerns about the worsening economic outlook in Britain – some analysts expect the economy contracted in the second quarter – encouraged Bank of England (BOE) Governor Mark Carney to signal last week that the central bank may strike a more dovish tone at its August policy meeting.
Markets are now pricing in a BOE rate cut over the next 12 months, as central banks around the world adopt an easing bias in the face of economic uncertainty and trade tensions between the United States and China.
Sterling has fallen for several days, its losses compounded by a dollar rallying after analysts scaled back expectations the Federal Reserve would cut interest rates by 50 basis points later this month.
Economic growth data for May, due at 9:30am, will help analysts decide whether the British economy is likely to have shrunk in the second quarter after a series of disappointing business surveys.
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