LONDON: Sterling dropped back below $1.32 ahead of inflation data on Tuesday, more evidence that investors will sell the pound any time it blips higher in expectation of a grim economic aftermath of last month's vote to leave the European Union.
Sterling saw its best performance since 2009 last week as many of those who had sold the pound in a 14 percent slide after the referendum took some of the profit they had earned in the process. It also gained around a third of a percent on Monday.
But the consensus of banks' forecasts is for the UK currency to fall to $1.28 in three months and $1.2650 in six as the uncertainty of an extended period of EU exit talks hurts the economy and the Bank of England eases monetary policy further.
"Going forward we expect ... sterling to decline on the back of weaker data, BoE easing and tough and long-lasting UK-EU Brexit talks," said ABN Amro strategist Georgette Boele said in a note to clients.
Sterling fell half a percent to $1.3291 and 83.92 pence per euro respectively in early trade in London. The inflation numbers for June, expected to show inflation still stuck just above zero, are due at 0830 GMT.
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