Sterling sets 26-yr high vs dlr, weakens vs euro
LONDON, Nov 7 (Reuters) - Sterling scaled fresh 26-year highs versus the beleaguered dollar on Wednesday, but remained under pressure against the euro on expectations that slowing growth will eventually prompt the Bank of England to cut rates.
UK data on Wednesday showed permanent job placements rising at their slowest pace in more than a year in October, while consumer confidence deteriorated slightly.
Although most economists expect the Bank of England to leave interest rates on hold at 5.75 percent when its two-day meeting ends on Thursday, they tend to agree that it will need to administer a growth-boosting rate cut before too long.
A small minority are even betting on such a move this month.
This has meant that sterling has underperformed the euro in recent sessions, though it has managed to gain ground versus a dollar hit by Federal Reserve rate cuts, slowing U.S. growth and troubles in the financial sector.
"It's general dollar weakness ... (But) sterling is underperforming on the crosses. It's seen as the next dollar and may be the most vulnerable to the sort of pressures the U.S. is under among the major currencies," said Adrian Schmidt, currency strategist at RBS Global Banking.
"The leading indicators are all quite soft ... so we think there is a decent case for a (UK rate) cut (this week)."
By 0805 GMT, the euro was up 0.16 percent at 69.81 pence, just below earlier one-week highs.
Sterling also opened at a one-week low on the Bank of England's trade weighted measure, at 102.80, and fell half a percent to 238.55 yen.
But the pound rose versus a broadly weaker dollar, scaling fresh 26-year peaks at $2.0954.
The dollar came under broad selling pressure after a Chinese central bank official said it was losing its status as a global currency.
Separately, a senior Chinese politician said that China should balance the make up of its FX reserves so strong currencies like the euro offset weakening ones like the dollar. No first tier UK data is due on Wednesday.
Source supplied by: Reuters