The British pound further eased against the euro and hovered at one-and-a-half month lows on Monday following its biggest weekly loss in over two years versus the shared currency, though it steadied against the U.S. dollar.
The euro has had a strong run over the past week after Germany’s game-changing fiscal reforms boosted the European growth outlook, while the dollar has languished against major currencies due to worries about a U.S. economic slowdown and flip-flops in tariff policy.
The spotlight will be on the release of Britain’s monthly gross domestic product later this week.
“Unless there is a significant deviation from the consensus, the data is not likely to impact expectations regarding Bank of England policy,” George Vessey, lead FX and macro strategist at Convera said.
The Bank of England is expected to hold interest rates at 4.5% next week.
Britain’s jobs market cooled in February, with hiring activity slowing and starting salaries rising at the slowest rate in four years, according to a survey on Monday that underscored companies’ concerns about higher employment costs and a soft economy.
Sterling extends drop versus euro after German fiscal boost
The euro was up 0.14% at 83.97 pence,, while the pound was steady on the dollar at $1.29265.
Vessey said the pound was struggling to regain technical levels against the euro, and if it could not, “further downside could be on the horizon, particularly as the fiscal divergence between the UK and euro zone may favour the euro due to differing growth trajectories”, Vessey said.
Germany last week proposed to ramp up spending with a 500 billion euro special fund sought for infrastructure and plans to reform its debt rules to boost defence spending.
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