Sterling wraps up small monthly loss against the dollar

LONDON: The British pound ended July with another weak showing on Friday after US inflation data boosted the dollar again.

The pound fell almost 1% during afternoon trading as it moved mainly on a rallying dollar after key US inflation data, but pared losses in the late afternoon to end the month about 0.1% down.

“The dollar is generally firmer, which seems to be a bit of an overreaction to marginally stronger core PCE data earlier today,” said Adam Cole, Chief Currency Strategist at RBC Capital Markets.

The pound was down virtually flat against the dollar by 1509 GMT at $1.2163 pence, having earlier fallen 0.9%.

The dollar rallied on Friday afternoon after news US consumer spending increased more than expected in June .

During 2022, sterling has recorded just one month of gains versus the dollar - rising marginally in May - but has racked up a 10.1% loss since January against a backdrop of economic slowdown, rising interest rates and domestic political turmoil.

“It’s generally been underperforming most of the year and it’s a trend that we expect to continue,” Cole said Data from the Bank of England on Friday showed British consumer lending rose last month at its fastest since May 2019 while the number of mortgage approvals fell to the lowest since June 2020.

It is the latest sign British consumers are facing an increasing cost-of-living crisis and comes ahead of the central bank’s key meeting next week, with policy makers mulling whether to increase interest rates by a larger hike of 50 bps.

Sterling stabilised versus the euro on Friday after hitting a three-month high versus the single currency on Thursday. The pound was down 0.4% versus the euro at 84.055 pence .