Sterling slips to one-month low versus dollar

LONDON: The pound fell to a one-month low against the dollar on Tuesday in what analysts said was the breaking of a technical level that did not change the bullish narrative on the British currency.

Sterling had held firm above $1.41 earlier in the session, showing no reaction to news that Britain was to delay its reopening from COVID-19 lockdown restrictions by one month due to the rapid spread of the more infectious Delta variant.

Currency markets were generally quiet ahead of the US Federal Reserve meeting, which ends on Wednesday.

But the pound slid gradually during the morning session. By 1155 GMT, it was down 0.4% at $1.4044, having touched $1.4035, its lowest in one month.

Versus the euro, it was down 0.4% at 86.24 pence per euro .

Simon Harvey, FX analyst at Monex Europe, said that the move did not arise from any particular news event but rather a breaching of the $1.4070 level to which it had come close in previous sessions.

"Sterling's bearish bias has been in place over the past week or so as it toyed with breaking below 1.41 against the dollar," he said.

"Today, momentum was on the side of the GBP bears as the pair smashed through the 1.4070 handle, triggering stops and pushing the currency down closer to its 50-day moving average, which rests at 1.4010."

Still, he said that he was bullish on the pound given that the delay in lifting remaining lockdown measures did not change the "structural backdrop" - expectation of an economic recovery.

Sterling rallied at the start of the year, boosted by the UK being initially ahead of its peers in rolling out COVID-19 vaccines. In May, it reached a three-year high of $1.425.

"We've really run out of that upward momentum we've had on the back of the vaccine story," said Kit Juckes, head of FX strategy at Societe Generale.

Juckes also said he was bullish on the pound versus the dollar, but that it would take substantial news to push the pair significantly higher.

Jobs data released earlier in the session showed that the number of employees on British company payrolls surged by a record amount in May as pandemic restrictions eased.