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Pound hits 4-month low

Thursday, August 14 08:14:42

Sterling set a fresh four-month low on Thursday, staying on the defensive after the Bank of England surprised investors the previous day by signalling it was in no hurry to raise interest rates.

The pound touched a low of $1.6668, its lowest level since mid-April, and down 3 percent from a near six-year high of $1.7192 touched in mid-July. It last traded at $1.6680, down about 0.1 percent on the day.

Wrong-footing the market again, Governor Mark Carney indicated on Wednesday that wage developments would be key to the exact timing of a rate move as the BOE slashed its forecast for wage growth.

Yet just a few months ago, Carney made sterling jump by warning investors that they were not sufficiently pricing in the chance of an early increase in record-low rates.

The setback in the pound helped support the dollar versus a basket of major currencies. The dollar index edged up 0.1 percent to 81.653, not far from an 11-month high of 81.716 set last week.

Against the yen, the dollar edged up 0.2 percent to 102.60 yen. The dollar has bounced back after hitting a two-week low of 101.51 yen late last week, when the safe-haven yen rose as geopolitical tensions sapped risk appetite.

A trader for a Japanese bank in Singapore said firm regional equities helped weigh on the yen versus the dollar in Thursday's Asian trade.

The euro held steady near $1.3361, having drifted off the previous day's high of $1.3416.

Latest data showing a surprise contraction in euro zone industrial production in June kept alive expectations for more stimulus from the European Central Bank and was certainly of no help to the common currency.

The euro could easily retest a nine-month trough of $1.3333 set last week if the region's gross domestic product data due later in the day were to disappoint. (Reuters)

For more visit: www.businessworld.ie