THE pound hit its lowest levels in over a week against a broadly stronger dollar.
The pound fell as much as 0.7 per cent to $1.3364 in early London trade, its weakest since August 14. This morning it was trading even lower at $1.3388.
Despite edging up after the UK data, sterling had fallen as much as half a percent to $1.3394 by 1615 GMT.
The US currency was buyout after the Federal Reserve Chair Janet Yellen said that the central bank should continue gradual rate hikes and that it would be “imprudent” to wait until consumer price growth had reached the bank’s target of two per cent.
The dollar hit its highest in five weeks against a basket of currencies.
Ratings agency Moody’s downgraded Britain’s credit rating on Friday, saying the government’s plans to bring down its heavy debt load had been knocked off course and Brexit would weigh on the economy.
Data released late on Friday showed speculators had cut their bets against the pound to the lowest level in almost two years in the week to last Tuesday after the Bank of England signalled it would raise interest rates from record lows in the “coming months”.
But the pound slipped on Friday, putting in its joint-weakest performance against the euro in seven weeks on Friday.
Investors are disappointed after Theresa May, who delivered a speech last Friday, failed to give details on how Britain would ensure that it kept preferential access to the EU’s single market after it leaves the bloc.
It added to its losses against the dollar on Monday, falling as much as half a percent to $1.3432 – its lowest since September 15.
“Sentiment is still slightly negative after Theresa May’s speech,” said ING currency strategist Viraj Patel.
“Markets had got a bit ahead of themselves last week, hoping that there would be some big groundbreaking Brexit speech… The speech didn’t actually guarantee that a transition deal is going to happen,” he said.
But Patel added that sterling’s price moves were largely the product of moves in the dollar and the euro on Monday.
The EU’s chief negotiator Michel Barnier on Monday said Britain, which asked for a two-year transition period after it leaves the bloc in 2019, would have to abide by all European Union rules during this phase.
The pound strengthened as much as 0.9 percent to 87.755 pence per euro, as investors priced political risk into the single currency after the German election results.
The vote in Germany showed a surge in support for the far right and put the country on course for what could be months of coalition talks.
Investors are also focused on looming economic data releases, such as Wednesday’s GDP numbers, to see whether bets on a Bank of England rate increase in November are justified.
How to get the best holiday money rate
WE spoke with Hannah Maundrell, editor-in-chief at money.co.uk to find out how you can guarantee the best rate when you go on holiday
- Don’t buy cash at the airport – you’ll always be able to beat the rate with a bit of forward planning
- Compare travel money companies online – Factor in delivery costs and choose the option that gives you the most cash to spend on holiday. If you’ve left it until the last minute order online for airport collection so you get the best of both worlds.
- Use comparison tools – MoneySavingExpert’s TravelMoneyMax enables you to compare pick-up and pre-order rates.
- Don’t pay for travel money with a credit card – it’s likely you’ll be charged a cash withdrawal fee which adds to the cost.
- Top up a prepaid card to lock in your rate now – Choose your card and read the T&Cs carefully as some apply hefty fees. WeSwap, FairFX and Caxton FX are all worth checking out.
- Always choose to pay in the local currency rather than sterling – This will help you avoid sneaky exchange fees
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