Pound Drops for the Seventh Week on Interest Rate Bets

0
104

Pound Drops for the Seventh Week on Interest Rate BetsThe pound extended its losses against the dollar for the seventh week, the longest decline since 2008, after investors became less optimistic that the Bank of England may hike interest rates soon.

The pound remained slightly unchanged as of $1.6572 at 4:46 pm in London, having dropped 0.7 percent this week. The UK currency had earlier plunged to $1.6562, its lowest level since April 4. However, the sterling gained 0.3 percent to trade at 79.85 pence per euro.

“We have just shifted into an environment where the world has found a new love for the dollar; it becomes easier to sell a currency like the pound,” Daragh Maher, a London-based foreign-exchange strategist at HSBC Holdings Plc, told Bloomberg News. “Markets have been faced with a run where the data disappointments have comfortably outnumbered the upside surprises, and on some crucial data points.”

The sterling touched a four-month trough against the dollar after Federal Reserve Chair Janet Yellen admitted that the U.S. labor market is nearing full employment, but said that some slack still remains.

The Office for National Statistics reported on Tuesday this week that U.K. inflation grew less than estimated. The consumer prices rose 1.6 percent in July, compared with June’s reading of 1.9 percent. Yield on the 10-year gilt was 2.40 percent while the value of the 2.25 percent bond that matures in September 2023 was 98.80.

Meanwhile, the Canadian dollar fell after the nation’s inflation rose slower than expected. The loonie remained slightly unchanged at C$1.0944 per US dollar after earlier touching C$1.0980, the lowest level since August 6. Canada’s consumer price index grew 2.1 percent in the year through July after gaining 2.4 percent the previous month, reported Statistics Canada. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com