Sterling hits fresh 2021 lows vs dollar, nine-day low versus euro

The pound shed 0.1 per cent versus the dollar to US$1.3320 (RM5.62) at 1644 GMT, and was set for a fifth consecutive daily decline after hitting its lowest level of US$1.3307 versus the greenback since December 2020. — Reuters pic
The pound shed 0.1 per cent versus the dollar to US$1.3320 (RM5.62) at 1644 GMT, and was set for a fifth consecutive daily decline after hitting its lowest level of US$1.3307 versus the greenback since December 2020. — Reuters pic

LONDON, Nov 26 ― Sterling fell yesterday to a fresh 2021 low against the dollar and to a nine-day low versus the euro as worries over economic growth outweighed expectations for a Bank of England rate hike.

The pound shed 0.1 per cent versus the dollar to US$1.3320 (RM5.62) at 1644 GMT, and was set for a fifth consecutive daily decline after hitting its lowest level of US$1.3307 versus the greenback since December 2020.

Analysts said recent moves have been largely a reflection of the dollar’s appreciation amid expectations that the Federal Reserve will raise interest rates.

But the fact that sterling also fell to a nine-day low against the euro, which has been hit by new Covid-19 restrictions across much of Europe, indicated “that investors are still wary about the headwinds to growth in the UK”, said Rabobank’s head of FX strategy Jane Foley.

Britain’s economic recovery from the coronavirus pandemic has lagged behind that of other rich nations.

Against the euro, sterling edged 0.15 per cent lower to 84.18 pence, after weakening to a nine-day low of 84.36 pence amid renewed post-Brexit setbacks.

Members of the French fishermen’s association said they plan to block the Channel Tunnel and the port of Calais today in protest over Britain’s failure to issue them with more fishing licences since Brexit.

Investors were also awaiting a speech by Bank of England Governor Andrew Bailey later in the day. Markets broadly expect the BoE to raise interest rates next month.

But anything could happen, analysts said, after the BoE wrong-footed many investors by holding rates at record lows at its November meeting. Bailey had said in October that policymakers would “have to act” to head off inflation.

“We continue to expect the bank to tighten next month, by 15 basis points,” said Jeremy Stretch, head of G10 FX strategy at CIBC.

“It will be interesting to determine how Governor Bailey deals with close questioning in the wake of marching the market up the rate hill this month only to disappoint those expecting a hike.” ― Reuters