The pound fell versus the dollar and euro on Friday as investors took a more bearish stance on the currency after a week that has seen negative data increasing expectations that the Bank of England may cut interest rates.
Prospects of a cut in interest rates when the Bank of England meets next week increased when weak housing and mortgage approvals data on Thursday indicated that the UK housing sector is under pressure.
Sterling got some respite as from more hawkish members of the Bank of England's Monetary Policy Committee failed to signal the need for cuts, but overall the prospects for the pound look rather bleak, analysts said. A significant proportion of analysts think the Bank of England is set to cut rates with a Reuters poll giving a roughly one in three chance that they will cut next week.
At 1537 GMT the pound was down 0.3 percent at $2.0552. The euro was steady at 0.2 percent at 71.54 pence. Pay deals in the motor industry pushed British wage inflation to 3.5 percent in the three months to November, a survey by pay consultants IDS showed on Friday, adding to inflationary pressures.
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