The pound fell on Thursday to its lowest level against the dollar since the beginning of July, swept away by the incessant rise of the American currency after Donald Trump's victory in the American election.
These developments are overwhelming UK news for investors, although they will be keeping an eye on Finance Minister Rachel Reeves' maiden speech at Mansion House to City leaders, as well as remarks from the Bank of England governor. 'England Andrew Bailey.
Ms Reeves said in advance that she wanted Britain to create a series of “megafunds” with new investment power of up to 80 billion pounds ($102 billion), as part of the biggest shake-up of UK pensions in decades.
Sterling was down 0.6% against the dollar at 1.2632, its lowest level since July 2, falling to its lowest level in early August by mid-morning at London.
The movement has been largely in line with peers. The euro was down 0.6%, to its lowest level in a year, and the dollar was up about 0.5% against the Japanese yen and Swiss franc. [FRX/]
“Cable (pound/dollar) is a dollar story at the moment,” said Nick Rees, currency analyst at Monex Europe.
Raising tariffs and tightening immigration under the new Trump administration are expected to fuel inflation, which could slow the Federal Reserve's rate-cutting cycle longer term.
These factors, along with expectations of a larger deficit and stronger economic growth in the near term, are pushing Treasury yields higher, providing further support for the dollar.
The benchmark 10-year Treasury yield rose to 4.483% on Thursday, its highest level since July. [US/]
The pound remained stable against the euro, at 83.12 pence for the common currency. It has gradually strengthened in recent months, “a reflection of European political risk which should be negative for the euro”, said Mr Rees, highlighting the situation in France and Germany.
The collapse of Germany's ruling coalition last week forced the country to hold snap elections due to take place in February, while the French government tries to push through its proposed budget for next year, although he does not have a majority in Parliament.
Related News :