Sterling fell to two week lows against the euro on Thursday after a weaker than expected UK manufacturing survey and comments from the Bank of England that did nothing to revive aggressive rate hike expectations.
BoE Governor Mervyn King's comments that the central bank had not abandoned its "gradualist" approach to raising interest rates gave no support to the pound as markets had earlier discounted this pace of monetary tightening.
The Confederation of British Industry's (CBI) survey showing a manufacturing sector recovery lost some steam in June, on the back of strong sterling and higher interest rates, came out as King and Monetary Policy Committee members testified before a parliamentary committee.
"The headline CBI numbers were a bit disappointing but they are by no means weak at all and for sterling to react the way it did just shows how poor sentiment is," said Ian Gunner, head of foreign exchange research at Mellon Financial Corporation.
By 1440 GMT the pound had weakened more than 0.4 percent to 66.93 per euro, passing the previous session's two week low against the single currency.
Sterling traded 0.28 percent higher on the day at $1.8207, but only with the help of broad dollar weakness. Earlier, the pound fell as low as $1.8103, its lowest since June 15 for the third day in a row.
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