Pound Declines to 15-Month Low Against Euro as U.K. Manufacturing Slows
The pound posted its biggest weekly decline in a month against the euro as signs that the U.K. economic recovery is faltering reduced the scope for interest- rate increases from the Bank of England.
Sterling fell versus 12 of its 16 major counterparts tracked by Bloomberg this week, losing most against the Swedish krona and sliding to a 15-month low versus the euro. Reports this week showed U.K. confidence fell and manufacturing growth unexpectedly slowed in June while a Credit Conditions Survey by the central bank predicted mortgage demand to drop in the third quarter. Bank of England policy maker Adam Posen said on June 27 that a call by theBank for International Settlements for higher rates worldwide to curb inflation was “nonsense.”
“Sterling is being completely marginalized by the worsening economic growth outlook in the U.K.,” said Peter Rosenstreich, chief foreign-exchange analyst at Swissquote Bank SA in Geneva. “If we continue to see an erosion in growth prospects then the possibility of rate hikes is virtually out of the question.”
The pound slid 1.6 percent this past week to 90.35 pence per euro as of 4:32 p.m. in Londonyesterday, from 88.90 pence on June 24. It reached 90.84 on July 1, the weakest intraday level since March 2010. Sterling gained 0.7 percent against the dollar to trade at $1.6069, from $1.5959 at the end of last week. Against Japan’s currency, the pound added 1.2 percent to 129.87 yen.