Brexit-Hit Pound Set For Worst Month Versus Dollar Since October
The pound is headed for its biggest monthly decline versus the dollar since October as Brexit talks between the UK and the European Union, alongside an underwhelming economic outlook, kept the currency pressured.
Sterling was on track for its fourth consecutive month of losses versus the euro. Comments from Bank of England policy maker Michael Saunders, that a modest interest-rate increase was warranted, did little to support the British currency, which weakened against 13 of its 16 major peers Thursday.
Political uncertainty in the UK also limited gains in sterling with UK Prime Minister Theresa May’s future coming under increased scrutiny after the Conservative Party’s poor performance in the June snap elections. While May said she will still run for re-election, in an interview to ITV in Kyoto, Japan, her own lawmakers doubted her prospects.
“The pound appetite remains limited,” wrote analysts at London Capital Group. With May in Japan “any good news in terms of a trade partnership could give a boost to the pound, but the overall bias remains negative”.
UK data in recent days proved mixed. GfK’s household-sentiment index staged a slight rebound this month from its lowest level since just after the Brexit vote, while a separate Lloyds index shows business sentiment weakened in August.
GBP/USD falls 0.3% to 1.2892, leaving its monthly drop at 2.4%, the steepest since October. Meanwhile, EUR/GBP climbs 0.3% to 0.9224 after reaching 0.9307 on August 29, its highest since October 7. Thursday’s move extends the euro’s advance this month to 2.9%.