Sterling hits lowest vs euro since October flash crash

Sterling sank almost 1% after inflation data came in below expectations

Britain’s pound fell to its lowest against the euro in 10 months. Photograph: iStock

Britain’s pound fell to its lowest against the euro in 10 months. Photograph: iStock

 

Britain’s pound fell to its lowest against the euro in 10 months on Wednesday, with nerves over jobs and wages data due later in the day adding to growing noise over Brexit negotiations with the European Union.

This comes after analysts at Morgan Stanley last week predicted that the two currencies could reach parity by next year.

Sterling sank almost 1 per cent on Tuesday after inflation data for July came in slightly below expectations, further quelling any speculation of a rise in Bank of England interest rates over the next year.

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Wage growth has tended to run well shy of price increases in recent years, deepening the pain for British households struggling with government budget cuts and often high housing costs.

Dealers said there was speculation of another weak figure in early trade in London and the pound deepened the previous session’s losses to trade at a 5-week low of $1.2842 by early morning.

It had recovered some of the earlier loss against the euro to trade at 90.98 pence per euro, versus an earlier low of 91.44 pence.

“Either this is just a continuation of the selling from yesterday or someone has again got a whiff of the labour numbers,” said a dealer with one London-based broker.