The pound slid 1.7% against the greenback yesterday as momentum to dump the pound snowballed following comments from King that lent his support to a weak currency. Sterling was at a two and a half month low against the dollar after comments from Mervyn King left FX markets in no doubt the Bank of England was comfortable with a weaker pound.A meeting set up between the BoE and London-based economists to clarify policy also worried investors who maintained their bearish sentiment toward the pound, pushing it lower.An easing of risk appetite added support to the dollar after data revealed a decline in US existing home sales from the previous month and undershooting forecasts.Additionally, as the US markets came online, equity markets took a turn into the red, which supported demand for the haven currency, and brought the price to a close of $1.6064.In trading this morning, sterling has tumbled to a four month low against the dollar as a break of the 1.60 level triggered a wave of stop loss sales.
Posts Tagged ‘Decline’
Sterling weakness drags it down below 1.60 following King’s comments
Posted in 
The pound’s decline continues, as confidence in the currency is undermined
Sterling went into its steepest daily decline against the single currency in 5 months yesterday, losing 1.2%, after Mr. King revealed that he was content with the current value of the pound. Sterling hit its lowest euro price since early April, extending broad losses after Mervyn King said that a weak pound was supporting a necessary rebalancing of the UK economy.The euro was also supported by a further rise in business confidence in Germany. Although expectations for the Ifo economic survey were not matched in September’s report, the modest increase reflected optimistic future expectations for economic recovery.Demand was further eroded as the Daily Telegraph reported yesterday that the Bank of England was set to meet with economists in a “crisis” meeting designed to stem alarm and confusion over the QE program and the weakness of the pound.Additionally, once the pound broke below the 1.10 level, automatic sell off points were triggered, driving sterling down to a near six month low of 1.0922.The pound has slid further in trading this morning, losing another 0.5%, and currently trading around 1.0900.
The dollar reversed its slide yesterday, buoyed by stronger equities, but has fallen back today
Despite a reassertion that US interest rates would stay low, the dollar advanced over half a cent against the single currency yesterday as global stocks went into decline. During early European trading yesterday, the intense selling pressure on the dollar abated amid caution ahead of the Fed’s rate decision, with the pair holding around the 1.4800 level.In the evening, the statement from the Fed confirmed speculation that rates would remain low for an extended period of time, which sent the euro to a high of 1.4841.However, the greenback rebounded strongly, as traders remained cautious of betting aggressively against the US dollar following a sudden slide in US stocks.
Sponsors:
