Sterling fell on Tuesday, with most of the good news on the UK economy already priced in and the Bank of England showing no signs it's about to tighten monetary policy. Sterling slipped 0.1 percent to $1.6095 in the European session, after reaching $1.6128 earlier. Robust near- term support is seen at its 55-day moving average of $1.6014, chartists said.
The pound fell against the euro, too. The euro was up 0.15 percent at 83.79 pence, with traders citing offers to sell at 84 pence. Trading volumes against the dollar and euro were well below the past month's average. "We are a bit bearish on sterling and see it trading at $1.60-1.61 levels," said Craig Erlam, analyst at Alpari. "The speed of the recovery will slow down. What we have seen in the UK in the past six months is not sustainable. Given that, we see some of the good news already being priced into sterling."
The pound is up 6 percent against the dollar since early August, supported by speculation the BoE might raise rates earlier than previously thought and by expectations the United States would keep monetary stimulus intact for now. After a run of stronger UK economic data, the BoE's quarterly growth and inflation forecasts last week suggested rates may rise in 2015. The BoE also said the jobless rate could fall to 7 percent by end-2014, earlier than it forecast in August. But Governor Mark Carney has made clear rates will not rise automatically when the jobless rate reaches 7 percent. The BoE is due to release minutes on Wednesday.
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