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Battered sterling gets respite but set for weekly fall vs dollar

by wrich
gawdo

By Lucy Raitano

LONDON (Reuters) – Britain’s pound edged up against the dollar on Friday, offering some respite from a week of selling that pushed the currency to two-year lows.

By 0835 GMT, the pound was up 0.21% at $1.2216, a day after falling to a fresh two-year low of $1.2165 as a slew of data pointed to a weakening British economy.

Kenneth Broux, European currency strategist at Societe Generale, said that while sterling was enjoying a respite, he wouldn’t read too much into any currency gains.

“We’ve had quite bad GDP data from March, and the stagflationary backdrop for the UK is not really great, then you’ve got tension boiling over in Northern Ireland over the Protocol,” he said,

Senior British politicians want to overhaul the agreement on trade between Northern Ireland and the United Kingdom that they signed up to in order to get Brexit done. They have warned they might have to take unilateral action.

Data on Thursday showed Britain’s economy unexpectedly shrank 0.1% in March after a slump in car sales due to supply-chain problems.

That has exacerbated concerns about a weakening growth outlook that could slow the Bank of England’s rate-hiking cycle and battered the pound.

While sterling is up against the dollar for the first time in over a week, the currency was heading for a fourth straight week of falls.

“The way ahead looks likely to remain very uneven for the pound,” ING currency strategists said in a note.

And sterling was lower against the euro, down almost a fifth of a percent at 85.24 pence.

 

(Reporting by Lucy Raitano; Editing by Dhara Ranasinghe and Emelia Sithole-Matarise)

 

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