Stg hits low vs euro as rate hold fails to support
Sterling plumbed a fresh all-time low against the euro for the third day running on Friday as the Bank of England decision the previous session to leave rates on hold did little to support the beleaguered currency. The pound has fallen 3 percent versus the euro since the start of the year and hit a fresh 10-month low against the dollar as poor retailer results and soft data have convinced investors that rates are set to fall sharply this year.
The Bank of England held rates at 5.5 percent on Thursday, surprising investors who had priced in around a 60 percent chance that they would cut rates.
While this provided brief support for the pound, a rate cut for February is fully priced in and more monetary easing is expected later in the year.
"People are very down on sterling," said Paul Robinson, currency strategist at Barclays Capital.
"With the Bank of England leaving rates on hold, the last day has stressed how negative on the UK economy people are and what a mess they think it is in."
By 0817 GMT, the euro had risen as high as 75.85 pence, its peak since inception in 1999. The pound fell as low as $1.9504, a trough since last March.
In further gloomy news for the UK economy, property development work in Britain shrank for a second month in December, posting its biggest fall in at least four years in a sign tumbling property values are hitting builder sentiment, property firm Savills said on Friday.
Investors will look to UK industrial and manufacturing output data for November at 0930 GMT for further clues on the health of the UK economy.
Sourced by Reuters.