Sterling on its way for a second consecutive day of losses
March 4, 2013 in Forex Analysis
Economic news (4 March 2013) – The British pound depreciated further against the dollar in early Monday trading, extending its Friday losses when it dropped to its lowest level in nearly three years. On Friday the sterling fell below the psychologically important $1.500 mark for the first time since July 2010, reaching an intraday low of $1.4998.
The release of the UK construction data on Monday morning revealed another disappointing result for the British economy as the PMI Construction dropped to 46.8, falling behind forecasts for a reading of 49.0. Following the news, the British currency sharply declined to its Friday low of $1.4998, before gaining some ground and trading at $1.5040 at the time of writing.
The British pound has now become the worst currency performer, surpassing even the deliberately weakened yen as its value is down 7.7% against the dollar and 6.5% against the euro. The latest big sell-offs were triggered by a series of negative economic data from the UK which was released on Friday. The very discouraging figure of the U.K. Manufacturing PMI was particularly in focus as it dropped below the important 50.0 mark, with an actual value of 47.9, much lower than the forecasted one of 51.0.
This year has been ‘rough’ for the sterling so far, putting it under huge pressure amid fears for the health of the UK economy, the increasing national debt and downgrading the country’s AAA credit rating. Though BoE officials said they are comfortable with the pound’s decline in order to boost exports, investors are very cautious about the sterling’s value.
Some analysts commented that there is still imminent fear for the British economy to enter into an unprecedented triple-dip recession.
Looking ahead of the week, the BoE monthly rate decision on Thursday will attract investors’ attention and cause more volatility in the pound’s charts movements. Market makers expect no change to be made, however speculations about further monetary easing by the central bank have increased lately.
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