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Sterling slips to 5 week low vs euro

Written by Business World, on 14th Feb 2018. Posted in World

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Sterling slipped to a five-week low against the euro on Wednesday, as investors turned cautious ahead of a speech on Brexit by Boris Johnson, Britain's foreign minister and prominent supporter of the campaign to leave the European Union.

Johnson will say that leaving the EU "is not grounds for fear but hope" in the first of several speeches by government ministers Prime Minister Theresa May hopes will set out a "road to Brexit."

The speech in London is being billed by aides as a chance for Johnson, who is credited with persuading many Britons to vote to leave the bloc, to show a path for "an outward-facing, liberal, and global Britain following our exit from the EU."

But some investors are worried that Johnson's pro-Brexit stance make him a risk for sterling.

Sterling slid against the dollar and the euro on Friday after the European Union's Brexit negotiator Michel Barnier warned Britain that a post-Brexit transition deal was "not a given."

Sterling slipped 0.3% against the euro to 89.20 pence , its weakest since Jan. 12.

It also edged down 0.1% on the day to $1.3869 against a dollar that was weaker against most other currencies.

Some investors wagered that Johnson's speech would be sterling-positive.

Sterling had strengthened on Tuesday after data showed British inflation unexpectedly stayed close to its highest levels in six years in January, firming up investors' bets that the Bank of England will raise interest rates again in May.

The BoE surprised financial markets last week by indicating that rates could move up faster than previously expected, as the Bank wanted to bring inflation back to its target of two percent within two years rather than three.

In a Reuters poll taken after the BoE's policy meeting last week, 32 of 57 economists said the Bank would raise its key rate to 0.75% in May, when it publishes its next quarterly Inflation Report.

In a January poll, only 13 of 71 economists had a rate hike in their forecasts for next quarter.

Wages numbers due next week will be closely eyed. (Reuters)

Source: www.businessworld.ie

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