Sterling stumbles against dollar

Sterling fell towards an 18-month low against the dollar on Thursday after data showed the number of Americans filing new unemployment claims tumbled to the lowest level in almost 15 years last week. The fall in US unemployment benefit applications far exceeded economists' expectations and came a day after the US Federal Reserve struck a positive tone and kept expectations of an interest rate rise this year on track.
Sterling, which has suffered in the past six months as investors have pushed back their bets on when the Bank of England will raise rates, fell 0.8 percent to $1.5025, close to an 18-month low of $1.4972 hit last week. As the dollar has strengthened over the past half-year, and after some major central banks have eased monetary policy by cutting interest rates and launching or expanding bond-buying programmes, some analysts had expected the Fed to take a more cautious tone.
"The Fed hasn't really pushed back against rate hike expectations and we've seen initial jobless claims which were much better than expected today and the dollar can therefore find a bit of an underpinning," said Jane Foley, a senior currency strategist at Rabobank. The upbeat US data contrasted with numbers from the UK, where a survey showed the British public's expectations for inflation in the next 12 months fell to their lowest level in six years in January, while longer-term inflation expectations hit a record low.
And separate numbers showed British house price growth slowed on an annual basis for a fifth month in a row in January, in another sign that the housing market is losing steam. Against the euro, sterling fell by around 0.8 percent, suffering from a broad move higher for the single currency.
Bank of England Chief Economist Andrew Haldane on Wednesday reiterated the message that the BoE was in no rush to raise interest rates and that when hikes do come, they will be gradual, perhaps as little as a half percentage point rise each year. BoE Governor Mark Carney also said the path to rate rises would be gradual. In a speech late on Wednesday, Carney urged the euro zone to do more, including a fiscal union, to escape its slow growth debt trap. "His comments show that he is concerned about the problems in the euro zone and its impact on the UK economy," a London based currency trader said.