Sterling slips against dollar

Sterling fell to a five-week low against the dollar on Thursday after a British consumers survey showing gloom about the economy's prospects next year kept it on the defensive and as worries about Brexit weighed on the currency. Against a perkier euro, the pound fell 0.7 percent to a two- week low of 85.07 pence. That made it sterling's fourth consecutive daily fall against the single currency, its longest losing streak since August, as it got caught in the slipstream of the single currency's recovery from a 14-year low against the greenback this week.
Sterling has for the past six months been less sensitive than usual to economic data, driven more by concerns over Britain's departure from the EU. Any signs that a hard Brexit, in which Britain loses access to the single market, is on the cards have tended to drive down the currency, with signs to the contrary giving it a boost. Analysts say the trend is set to continue.
"Between January and March, there may be further clarity on the UK's negotiation approach with its EU partners as Theresa May plans to publish a 'Brexit plan'," said Nomura currency strategist Jordan Rochester. "Our concern is that the market is too complacent and optimistic in its Brexit pricing as UK asset pricing seems to suggest the market is moving away from a hard Brexit pricing, with little concrete reason."
Sterling fell as much as 0.3 percent to $1.2312, its lowest since November 18. A big jump in households' appetite for major purchases helped market research company GfK's monthly consumer sentiment index inch up to -7 in December from -8 in November, but this concealed a deterioration in consumers' outlook for 2017.
Expectations for the year to come are now the weakest since just after June's vote to leave the European Union, and before that they were last lower in April 2013, when the economy had suffered a period of sluggish growth. "Both the economic and financial situation expected by consumers over the next 12 months has deteriorated, and hints that confidence will slide more clearly in the first half of 2017," J.P. Morgan economist Allan Monks said.