Sterling extended falls against a broadly firmer euro, which hit a fresh 5-1/2 week high against the UK currency on Tuesday as data gave more evidence of a deteriorating UK economy. Against the dollar, sterling staged a recovery, after sharp falls on Monday, helped as UK shares rose 1.5 percent, but analysts said the outlook for the pound remained negative after it tumbled to a six-week low on Monday.
Fresh UK banking sector concerns caused the pound to fall more than 2 percent against the dollar and the euro on Monday, but there was no let-up in the bad news on Tuesday as data continued to point to a worsening UK economic outlook.
Figures showed British industrial output fell more than twice as fast as expected in January and shrank at its fastest annual pace since January 1981. Surveys overnight also showed a 1.8 percent fall in UK retail sales during February, alongside evidence that house price falls accelerated.
"There was sterling selling pressure all through the day yesterday and it got to the point where the move was so extended (against the dollar) that we were always going to see a bit of a bounce back today," Bank of Scotland Treasury Services currency strategist Naeem Wahid said.
The euro rose 0.7 percent to hit a five and a half week high of 92.32 pence, helped as the single currency jumped over 1.6 percent against the dollar. Against the dollar, sterling rose 0.6 percent to $1.3852, though it remained not far away from a six week trough of $1.3741 reached on Monday.
Comments
Comments are closed.