Weak economic data sends sterling to new lows against dollar
Reuters
Published May 12, 2022 09:00
Updated May 12, 2022 16:20
By Joice Alves
(Reuters) -Sterling fell to a fresh two-year low against the U.S. dollar on Thursday after a slew of data pointed to a weakening British economy.
Britain's economy unexpectedly shrank 0.1% in March after a slump in car sales due to supply-chain problems.
Data also showed British employers added permanent staff last month at the weakest rate in more than a year suggesting the labour market might be cooling, according to a survey that will be noted by the Bank of England as it assesses inflation pressures.
"The 0.1% month-on-month drop in UK March GDP highlights the loss of momentum in the economy since the start of the year as higher inflation bites," said Jane Foley, head of FX at Rabobank London.
The Bank of England will have to push borrowing costs higher to control fast-rising inflation, but its four interest rate increases since December are having an impact on the economy, Deputy Governor Dave Ramsden told Bloomberg News.
"Hawkish remarks from Ramsden are a reminder of the stagflationary theme and have offered no respite to the battered pound," Rabobank's Foley added.
CIBC Economics said it had revised down its forecast for sterling, in line with the deterioration in the growth backdrop and squeeze to incomes from higher inflation and taxes.
By 1455 GMT, the pound was down 0.1% at $1.22300 against the dollar, after touching $1.2165, its lowest since May 2020, in early London trading.
Adding pressure on sterling, the dollar hit a two-decade high after U.S. inflation eased less than markets had expected, likely keeping the Federal Reserve on course to tighten policy aggressively.
Against a weakening euro, hit by a fresh wave of risk-aversion, sterling had a choppy day. It jumped 0.8% to 85.19 pence against the euro, after falling to 86.18 pence in early London trading, its lowest against the single currency since October 2021. [FRX/]
Get The App
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.