Sterling fell sharply across the board on Monday, mirroring declines in equities and other currencies perceived as higher risk as investors took profit after last week's strong rally in risky assets. Last week's unexpected Bank of England decision to expand its quantitative easing programme by 50 billion pounds also continued to dent the currency as investors anticipated a dovish quarterly Inflation Report from the central bank on Wednesday.
This kept sterling under pressure against the euro - which rose above 90 pence for the first time in 12 days - in addition to sharp falls against the dollar and the yen, the currencies which typically gain in a risk averse market.
As well as the BoE's latest forecasts for growth and inflation on Wednesday, investors were also cautious ahead of UK industrial production data scheduled for release on Tuesday and unemployment figures on Wednesday, with both forecast to be weak.
"People have taken the BoE's decision to expand its quantitative easing programme as a sterling negative," Bank of Scotland Treasury currency strategist Naeem Wahid said. At 1408 GMT, sterling had fallen 1 percent against the dollar to $1.5098, just above a session low of $1.5080. The UK currency had earlier hit a four-month high two cents above that low at $1.5280. Sterling also tumbled 2.3 percent against the yen to a 10-day low of 146.76 yen as UK shares traded down around 1 percent. The euro gained 0.8 percent against the pound to a 12-day high of 90.09 pence.
Comments
Comments are closed.