LONDON: The pound traded near a five-month low of $1.33 on Friday, hindered by worries over Brexit and further signs of sustained weakness in Britain's economy.
Sterling had been one of the best-performing currencies in 2018, but weak economic data and a recent surge in the dollar have erased all of the pound's gains this year.
Markets have drastically scaled back expectations for when and how much the Bank of England will raise interest rates, as British economic growth slows, which the central bank has partly attributed to bad weather.
But data on Friday showed the economy grew just 0.1 percent in the first quarter, suggesting that sluggishness in the economy was more protracted. That kept the pound down.
"0.1 percent growth is pretty anaemic ... the overall picture remains one of slowing economic activity," said David Cheetham, chief market analyst at XTB.
At GMT 0930 the pound was down 0.2 percent to $1.3353 as the dollar gained across most major currencies.
Recent weak economic data mean markets are not pricing in a full 25-basis-point hike by the end of 2018. They had expected two 25 bp rises this year.
Concerns about the sort of relationship Britain can agree with the EU before it exits the bloc in March 2019 remain a key influence over sterling.
BoE Governor Mark Carney said on Thursday the central bank could pump more stimulus into Britain's economy if this year's Brexit negotiations result in a bad deal.
Carney's comment came two days after he said the Brexit vote has cost each UK household 900 pounds.
A Reuters poll published on Wednesday suggested a one-in-five chance of a disorderly Brexit.
Analysts at CMC Markets and Commerzbank, in notes to clients, predicted the pound would fall toward the $1.3300 level in the short term.
Comments
Comments are closed.