The pound has dived below $US1.22 for the first time since mid-January on Tuesday as sterling investors react to worse than forecast house price and retail sales data, and await a crucial debate in the House of Lords later that could alter the course of Britain’s EU exit process.
Sterling’s first hit on the day came after new figures from the British Consortium of Retailers (BRC) released overnight, showed that non-food retail sales fell for the first time since 2011 in the quarter to February, dropping by 0.4%.
As a result of these two factors, as well as the impending Lords debate, sterling is down by around 0.4% as of 10.40 a.m. GMT (5.40 a.m. ET) to trade at 1.2193 against the dollar.
Here is the chart:
Sterling has now seen gains in seven of the last eight trading sessions, and could be pushed even lower on Wednesday, if market reaction to Chancellor Philip Hammond’s first budget is negative. Depending on how markets interpret Hammond’s words and actions, the British pound could be in for a bumpy ride downwards.
“The UK Spring Budget is the next big event risk that could further knock the stuffing out of sterling,” Kathleen Brooks of City Index wrote on Friday.
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