LONDON: Sterling struggled to rebound against the dollar on Friday and was on track for its worst week since November, while new data added to indications of a slowing British economy.
The pound edged up 0.1% to $1.2395, having slid 1.16% on Thursday.
The currency hovered close to the April lows it hit the previous day and looked set to end the week 1.4% lower.
Global currencies, including the pound and the euro, recorded steep losses against the dollar on Thursday when investors returned from the New Year holidays.
Expectations for US rates to stay higher for longer as markets brace for the incoming Donald Trump administration, whose policies traders think could boost economic growth, has sent the dollar rallying ahead of other global currencies for the past three months.
A souring outlook for the British economy, coupled with a more dovish signals from the Bank of England (BoE), has taken another chip off the pound, despite being last year’s best performing G10 currency against the greenback.
British lenders approved fewer mortgages than expected in November and consumer lending increased at the weakest pace since mid-2022, Bank of England data showed on Friday, adding to indications of a slowing economy.
Mortgage approvals fell to 65,720 mortgages in November from 68,129 in October, the lowest reading since August.
Francesco Pesole, forex strategist at ING, said concerns over gas prices could also have played a factor in Thursday’s slide in both sterling and the euro.
Wholesale gas prices in Europe are around their highest in over a year, with temperatures falling, lower levels of gas in storage, and the expiry of a decades-long deal for Russia to supply gas to Europe via Ukraine.
Pesole said the pound is the most negatively correlated with gas in the G10: “The UK is...in a way the least prepared economy to another shock in gas prices”.
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