Sterling hits 1-1/2 year low on trade weighted basis
Sterling hit its lowest level in 1-1/2 years on a trade-weighted basis on Thursday as investors anticipate that imminent interest rate cuts will hit the currency's yield appeal.
A raft of softer than expected data in the run-up to the Christmas break and a unanimous vote by the Bank of England's Monetary Policy Committee to cut interest rates in December have convinced investors that more monetary easing is likely soon.
"It goes back to the clear 9-0 vote last week that hit the pound," said Niels Christensen, FX strategist at Nordea in Copenhagen.
"This saw the pound go through technical levels making it vulnerable to negative sentiment in thin trading before year end."
On a trade-weighted basis the pound opened at 98.4, its lowest since April 2006 <=GBP>.
The euro was down 0.1 percent at 72.96 pence but close to an all-time high of 73.14 pence set on Wednesday.
The pound was up 0.15 percent versus the dollar at $1.9867 by 8:34 a.m.
Trading is likely to remain thin until the new year as there is no major data until manufacturing PMI next Wednesday.
source supplied reuters