Sterling hits fresh 2021 lows vs dollar, 9-day low versus euro
By Joice Alves
LONDON, Nov 25 (Reuters) - Sterling fell on Thursday to a fresh 2021 low against the dollar and to a nine-day low versus the euro as worries over economic growth outweighed expectations for a Bank of England rate hike.
The pound shed 0.1% versus the dollar to $1.3320 at 1644 GMT, and was set for a fifth consecutive daily decline after hitting its lowest level of $1.3307 versus the greenback since December 2020. GBP=D3
Analysts said recent moves have been largely a reflection of the dollar's appreciation amid expectations that the Federal Reserve will raise interest rates.
But the fact that sterling also fell to a nine-day low against the euro, which has been hit by new COVID-19 restrictions across much of Europe, indicated "that investors are still wary about the headwinds to growth in the UK", said Rabobank's head of FX strategy Jane Foley.
Britain's economic recovery from the coronavirus pandemic has lagged behind that of other rich nations.
Against the euro, sterling EURGBP edged 0.15% lower to 84.18 pence, after weakening to a nine-day low of 84.36 pence amid renewed post-Brexit setbacks.
Members of the French fishermen's association said they plan to block the Channel Tunnel and the port of Calais on Friday in protest over Britain's failure to issue them with more fishing licences since Brexit.
Investors were also awaiting a speech by Bank of England Governor Andrew Bailey later in the day. Markets broadly expect the BoE to raise interest rates next month. BOEWATCH
But anything could happen, analysts said, after the BoE wrong-footed many investors by holding rates at record lows at its November meeting. Bailey had said in October that policymakers would "have to act" to head off inflation.
"We continue to expect the bank to tighten next month, by 15 basis points," said Jeremy Stretch, head of G10 FX strategy at CIBC.
"It will be interesting to determine how Governor Bailey deals with close questioning in the wake of marching the market up the rate hill this month only to disappoint those expecting a hike."
Graphic: World FX rates in 2021 Link
Graphic: Trade-weighted sterling since Brexit vote Link
Reporting by Joice Alves; Editing by Angus MacSwan and Gareth
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.