Pound falls sharply against the euro
The currency dropped against most of its 16 major peers after consumer-price growth matched that of the previous month, which still was the highest since late 2014.
The pound fell 1.2% to $1.3175 in London trade. It weakened 1.3% to 85.30p against the euro. Sterling touched a 31-year low of $1.2798 on July 6 and is still down about 11% against the dollar since the June 23 Brexit vote.
The Bank of England, which cut its key interest rate and expanded a bond-buying programme last month, will leave its stimulus measures unchanged tomorrow, analysts forecast.
Analysts said investors and traders also sold sterling after its recent rally ahead of policy meetings by the Federal Reserve and the Bank of Japan next week.
Long-dated UK government bonds pared gains to stand little changed after the Bank of England bought €1.17bn of gilts with maturities longer than 15 years as planned, with offers outstripping bids by 3.21 times.
“We are mostly looking for two-way risks,” said Ned Rumpeltin, the European head of currency strategy at Toronto Dominion Bank in London.
“Sterling still has a substantial base of short positions against it. A decent proportion of that will stick to their guns as the medium-term fundamentals for the pound remain very bearish. We remain committed to a sell-on-rallies posture.”
Consumer prices grew 0.6%, the UK’s Office for National Statistics said, less than the 0.7% forecast by economists in a survey. UK data since the June 23 referendum have been mixed.
Sterling, still the worst performer among major currencies since the Brexit vote, has outperformed all of its 16 major counterparts in the past month as reports from services to construction showed the UK economy was holding up better than some economists predicted.
The dollar strengthened even after Fed governor Lael Brainard’s comments earlier this week damped talk on a US interest-rate rise.
CONNECT WITH US TODAY
Be the first to know the latest news and updates
