Sterling falls versus dollar

Sterling fell against the dollar on Friday, with disappointing economic data and prospects of more policy easing by the Bank of England leaving it vulnerable to further losses. While the US Federal Reserve hinted this week at a paring back of its current $85 billion-a-month stimulus programme, the view that incoming BoE governor Mark Carney may push for aggressive monetary easing could undermine the pound.
Sterling was down 0.1 percent against the dollar at $1.5090, not far from the 10-week low of $1.5014 struck on Thursday. The pound has shed around 0.7 percent this week and was on track for its third consecutive week of losses versus the dollar. Reported option expiries around $1.50 could keep the British currency pinned around these levels. Strategists cited resistance at the $1.5285 level which is its 50-day moving average and close to its May 17 high.
"It has been a rough week for sterling and it is now moving pretty much on the back of the US dollar. Markets are trying to figure out what is going on with the Fed and that is what is driving it," said Kathleen Brooks, research director at FOREX.com. Brooks said another bout of dollar strength could see the pound slip further but added that the $1.49 level was a very strong support level, below which sterling would look oversold. The euro was up 0.1 percent against the pound at 85.63 pence. It had risen to a peak of 85.925 pence, its highest level since April 17, after data showed an improvement in German business morale in May.
With UK markets closed on Monday and little data next week, strategists said the pound would remain relatively range bound and any significant moves would be dictated by factors outside of Britain. Recent domestic data in Britain has pointed to a patchy recovery but the BoE has refrained from restarting its bond purchases, with Wednesday's minutes showing only three of the nine policymakers voting for more easing in May.
Some strategists, however, said Carney's entry could lead to more stimulus and a weaker pound. "The main question (for sterling) is what Carney does ... market expectation is that he might be a bit more dovish," said Saeed Amen, currency strategist at Nomura.