Sterling is continuing its lacklustre week, stuck at one-month lows against the dollar, as unimpressive UK economic data and unanswered questions over Brexit continue to weigh on the pound.
At pixel time, the pound is flat against the dollar at $1.2868, hovering above one-month lows. Against the euro, sterling is also flat, at its lowest level since October 2016, providing little relief for British holidaymakers due to jet off abroad.
UK inflation data came in slightly below expectations at 2.6 per cent yesterday, all but wiping out chances of a rate hike from the Bank of England this year, according to analysts.
“The combination of lacklustre UK economic data and political noise has served to highlight sterling’s vulnerabilities this week, and we expect these factors to further weigh on the currency,” said Chris Turner, head of foreign exchange strategy at ING.
He added there was little chance of a jump in the pound any time soon. “Those looking to wage growth as evidence for rising underlying price pressures are unlikely to find much support in the UK jobs report today. We expect average hourly earnings growth to remain unchanged at 2% – and stay pretty much anchored at this level for the rest of 2017.”
Commerzbank warned of a “general helplessness” over Brexit that it thinks will continue to weigh on the pound.
“Following yesterday’s publication of the British government’s position paper on the customs union British companies sounded relived about the fact that the aim is a smooth transition period,” said analysts at the bank.
“But the reaction amongst EU officials was muted so that it remains unclear how intense the future economic ties between the EU and Great Britain are going to be. And unless a solution emerges on this front we remain cautious as far as Sterling is concerned.”