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coronavirus
Coronavirus
VERY HIGH
Source: covid.gov.pk
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1524hr
Pakistan Cases
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5,19624hr
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Islamabad
120,813
KPK
186,537

LONDON: Sterling fell to a one-month low on Wednesday as investors pushed back expectations of a rate hike by the Bank of England after a flurry of weak data.

In early London trade, the British currency eased 0.1% to $1.3636, with more losses expected after it dropped below a low of $1.364 hit on Monday, according to analysts.

Even a subdued greenback and improving risk sentiment after debt-laden China Evergrande calmed nerves by saying it would repay a yuan-denominated bond on Thursday failed to lift the pound.

The focus was squarely on central bank action this week as investors went from expecting hawkish commentary by the BoE to digesting that an interest rate hike was probably more than six-months away after a string of dismal economic data.

While money markets expect at least two rate hikes by the end of 2022, some analysts say those expectations may be optimistic.

“Given what the market has being pricing over the last couple of weeks, that could lead to some kind of disappointment and a softer pound,” said Lee Hardman, currency analyst at MUFG.

For sterling to rally again, BoE needed to lay out its timeline for raising rates starting early next year, which seems quite premature, he added.

A lot depends on how Britain’s labour market will fare in as the job furlough scheme is about to end this month, with ING analysts expecting a rise in unemployment over the coming weeks.

Weak economic output in July and retail sales the following month, along with high inflation, were already weighing on the central bank’s decision making.

The pound was also a tad weaker against the euro at 85.90 pence as participants awaited the next big Fed event for hints on its future policy path, including whether it would begin tapering its bond buying by November.

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