Sterling slides further against euro and dollar

UK currency now trading at 89.3p against the euro

Sterling has suffered particularly badly this month. Photograph: iStock

Sterling has suffered particularly badly this month. Photograph: iStock

 

Sterling fell against the euro and the dollar again on Wednesday, leaving the UK currency at its weakest since June 2017 and facing its longest losing streak since the depths of the financial crisis in 2008.

Sterling has weakened sharply in August as traders grow increasingly worried that the UK will crash out of the EU next year without a trade deal, and as the dollar has surged.

Sterling fell versus the euro after earlier gains, and was down 0.1 per cent at 89.340 pence in late European trading.

“It’s not just a question of Brexit, it’s also a recognition that the UK economy has not been particularly strong,” Aviva Investors head of multi-asset funds Sunil Krishnan said. “So, recognising there will be a great deal of volatility in sterling in both directions as we have news and rumour around Brexit you can see a weakening trend for sterling ... we are generally underexposed to sterling and position for sterling to weaken a bit more from here,” he said.

Surging dollar

Against the dollar, sterling slipped further to as low as $1.2689 , its weakest since June 22nd, 2017, as the US currency extended its rally and after British inflation data for the month of July came in as expected. A 12th session of losses against the US currency would match sterling’s losing run of August 2008.

UK consumer price inflation nudged up to 2.5 per cent year-on-year in July from 2.4 per cent the previous month, in line with expectations, data showed on Wednesday. The rise is the first time inflation has picked up in 2018 and leaves many British households still feeling squeezed – workers’ wages have failed to keep up with inflation for much of the past decade.

Data on Tuesday showed British workers’ wages rising at their slowest rate for nine months, up 2.4 percent annually, although there was also a surprise fall in the unemployment rate. – Reuters