The pound headed for its weakest level in eight weeks against the US dollar on speculation the UK economic growth is lagging market estimates.
The sterling plunged 0.3 percent to trade at $1.6831 as of 4:21 p.m. in London after rising to $1.6822. The pound fell to $1.6814 on August 4, its weakest level since June 12. The UK currency remained slightly unchanged at 79.33 pence per euro.
“We have become much more conscious of the risks for the pound,” Michael Sneyd, a London-based foreign-exchange strategist at BNP Paribas SA, told Bloomberg. “Partly around the fact that the data is softening slightly and also around Scotland’s referendum.”
The pound lost its ground against major counterparts after a report indicated the UK’s shop prices fell by a record margin in July. Another report showed that industrial output in June grew at a weaker pace than expected. Prices in Britain’s stores declined 1.9 percent in the year through July, the most since data started being compiled in 2006, reported the British Retail Consortium on Wednesday.
The Office for National Statistics announced today that UK’s industrial production rose 0.3 percent in June, compared with a decline of 0.6 percent in May. Economists had expected the output to grow 0.6 percent.
An index of inflation expectations over the next 10 years fell to its weakest level since January 2013. The 10-year break-even rate, a key inflation measure that tracks future projections of retail-price inflation using the spread between conventional gilts and index-linked bonds, fell two basis points to 2.82 percentage points, the weakest level since January 9, 2013.
The Citigroup’s UK Economic Surprise Index, which measures if data meets or lags market estimates, stood at -7 today, the fifth straight day that it remains under zero, compared with a high of 37.1 attained in February this year. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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