The pound is at a more than one-month low against the dollar after falling during trading on Tuesday.
Sterling is lower by almost 0.5% against the dollar to trade at $1.2966 at around 1:40 p.m. BST (8:40 a.m. ET). The pound fell as low as $1.2959 at around 11:40 a.m. BST (6:40 a.m. ET). That’s lower than at any point since August 15.
There does not appear to be any direct driver of sterling’s slide on the day, and on a daily basis it is not a hugely substantial move, but it pushes the UK’s currency back below the psychologically significant $1.30 mark.
Here is the chart of sterling’s fall on the day:
Sterling had rallied in late August, following a slew of better than expected post-Brexit data coming out of the British economy, which seems to suggest that its is coping admirably well with the shock of the result.
In the last few weeks, IHS Markit’s PMI surveys for all three crucial sectors of the economy — services, manufacturing, and construction — bounced back from disastrous figures in July.
Manufacturing, for instance, saw its biggest single month jump in history, while services jumped quicker than at any time in 20 years. The construction sector remained in contraction,but it is important to note that the sector was already shrinking even before the Brexit vote.
On top of the PMIs, retail sales remained strong and business confidence bounced.
However, confidence seems to be dwindling, and as a result, sterling has slipped drastically in September. It reached a post-referendum high of $1.3430 on September 6, but since then has dropped almost continuously, and is set for three straight weeks of losses. Here’s how that slide looks:
The uncertainty surrounding exactly what Britain’s EU exit will look like, as well as the tough stance key EU politicians like Jean Claude Juncker and Guy Verhofstadt look to be taking on any deal, is one reason that confidence is being undermined, hurting sterling.
More weakness is expected from the pound in the next months and years, with some predictions suggesting that sterling and the dollar could even reach parity. Most forecasts, however, put sterling’s bottom at somewhere around $1.15-$1.20.
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