The big picture in currency markets is one of a steadily strengthening dollar, and sterling was not immune
International News via Reuters:
The pound fell against the dollar on Tuesday, caught up in the global trend, but strengthened marginally against the euro as traders awaited a speech by British Prime Minister Andy Burnham at his governing Labour Party’s annual conference.
The big picture in currency markets is one of a steadily strengthening dollar, and sterling was not immune. The pound lost 0.2% to $1.3226, close to a three-month low, as elevated US bond yields and oil prices combined to boost the dollar.
But the pound did manage to strengthen against the euro for a third day, with the common currency last down 0.1% at 85.72 pence.
Burnham will speak later in the day and offer an “honest conversation” with Britain to spell out the trade-offs in tackling some of the nation’s deepest problems, such as social care and the control of utilities, in his first conference speech as prime minister.
The speech may not have a dramatic effect on markets, but finance minister John Healey on Monday managed to elicit a small positive reaction for the pound and helped British government bonds, known as gilts, avoid the worst of the global selling.
Societe Generale analyst Kenneth Broux said the pound and gilts had outperformed peers on Monday after Healey’s pledge for fiscal responsibility.
“But it will take more convincing for gilts that the government is serious about stabilising spending. PM Burnham faces a tricky balancing act,” Broux added.
Also in the background for the pound was Bank of England data showing that unsecured lending to British households in August rose at the fastest annual pace since at least 1993.
Reporting by Alun JohnEditing by David Goodman
