Sterling fell more than one percent against the resurgent dollar on Friday and slid against the euro as investors who had sold the dollar for months were forced to buy it on the break of key technical levels.
Sterling's trade-weighted index fell, however, dropping to 105.6 from a one-year high of 106.0 on Thursday, one day after it hit an 11-year high on the dollar.
"Sterling has been a bit independently weak today. It's more to do with positions being shaken out than anything fundamental," said Adam Cole, senior currency strategist at Credit Agricole Indosuez in London.
"Sterling has been carried up a long way on the back of carry and the hawkish interest rate news this week. It's correcting for that reason."
By 1700 GMT the pound had dropped more than 1.4 percent to its lowest in over a week at $1.8668 before struggling back to $1.8676.
It hit an 11-year high at $1.9140 on Wednesday, its strongest point since just before sterling was pulled out of Europe's exchange rate mechanism in Britain's the Black Wednesday currency crisis of September 1992. UK interest rates are at 4.0 percent, higher than US rates of 1.0 percent and euro zone rates at 2.0 percent.
Bank of England deputy governor Rachel Lomax fuelled rate rise speculation when she said earlier in the week it was natural that interest rates should rise as the economy strengthened.
Against the euro sterling was a third of a percent weaker on the day at 67.29 pence per euro, having touched a one-year high at 66.96 on Thursday.
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