The pound fell below $1.60 on Friday, and rising risk aversion has seen it tumble further this morning

Confidence in the UK currency remained weak on Friday in the wake of comments made by Mr King and the BoE, with the price sinking below $1.60.

  • Having initially fallen to a four month low of 1.5921 in the early hours of Friday morning, the pound proceeded to consolidate above 1.60, with analysts suggesting that a bullish correction was expected in the wake of Thursday’s plunge.
  • However, bearish sentiment towards the pound soon returned, with traders continuing to dump the British currency on perceptions that the BoE would lag other countries in tightening its loose monetary policies.
  • In the afternoon, a worse-than-expected reading in U.S. durable goods orders triggered a risk aversion rally, which also helped to send the pound back down near its intra-day low.
  • Additionally, analysts noted that the pound’s slide led Japanese retail traders to liquidate sterling/yen long positions, adding further selling pressure.
  • In trading this morning, the pound is down half a cent as a rise in risk aversion is spurred by weaker stock trading in the Asian markets.