Sterling Falls To $1.25, Eyes On BoE, sales
Sterling fell almost half a percent in morning trade in Europe on Thursday, suffering along with a raft of other currencies against the dollar after the U.S. Federal Reserve raised its forecasts for interest rates next year.
The pound has been threatening to break past resistance around $1.27-$1.28 all week but in early deals in London it was struggling to hold above $1.25 after the dollar’s surge overnight.
It was flat at 83.78 pence per euro ahead of a busy morning that includes November retail sales and the Bank of England’s monthly monetary policy decision at 1200 GMT, which is expected to bring no changes.
“It will be interesting to see what type of outlook the BoE offers in light of more solid data and (a) resilient UK economy in the face of Brexit,” analysts from currencies exchange LMAX said in a morning note.
“The market has seen a sizable correction towards major resistance at $1.2800 over the past several days. A daily close below $1.2300 will put the immediate pressure back on the downside.”
Inflation and wages data this week have both been marginally above forecast and retail sales are forecast to rise by a solid 5.9 percent year on year. That would reinforce the picture of an economy that for now appears to be riding out any turbulence generated by June’s vote to leave the European Union.
Finance minister Philip Hammond said during a visit to Tokyo that Japanese financial sector companies had expressed concerns about access to European financial markets and hiring highly skilled workers after the vote.
Prime Minister Theresa May will update Britain’s partners in Brussels on Thursday on her plans to launch talks by March on quitting the EU, and they will settle their arrangements for the negotiations.