LONDON, July 11 — The pound edged higher today thanks to broad-based dollar weakness, snapping a recent losing streak, though investors remained wary about the British currency’s outlook on growing economic headwinds and political fears.
The British currency plumbed to a two-year low this week at US$1.2439 (RM5.12) before recouping some losses. Today, it gained a quarter of a percent to US$1.2535.
A raft of dismal data and the risk of Britain crashing out of the European Union without agreeing transitional trade arrangements has forced the Bank of England to change its upbeat assessment of the economy.
Its hitherto hawkish stance, at odds with other central banks in the developed world, had been a key source of support for sterling this year.
Versus the euro, the pound edged higher to 89.90 pence but was still on track for a record tenth consecutive week of losses.
Today offered some relief for the beleaguered pound as the US dollar struggled after Federal Reserve Chair Jerome Powell kept the door open for US interest rate cuts.
Weak economic data weighed on the pound’s outlook and prompted hedge funds to ramp up their short bets against the British currency.
A Citigroup index of economic activity in Britain has dropped to its lowest levels in eight years while similar gauges in Europe have stabilised.
Hedge funds had ramped up their short bets against the pound to their highest levels since October 2018. — Reuters