The British pound continued to slip against other major
currencies on Monday, pressured by weak economic data in recent
weeks that some strategists say may jeopardize the timing of a hike
in interest rates, as well as uncertainty over the outcome of this
year's general election.
In early trade, the pound fell as much as 0.5% against the
dollar, and lost ground against the euro and yen.
Currency strategists at National Bank of Australia wrote in a
note that "political risk" is dominating "with consumers weary of
the whole electoral process' that will culminate at the general
election in May. Derek Halpenny, European head of currency research
at Bank of Tokyo-Mitsubishi UFJ Ltd. said the announcement from
Shire PLC over the weekend, that it is buying NPS Pharmaceuticals
Inc., a maker of treatments for rare diseases, for $5.2 billion,
could be accentuating the move.
Mr. Halpenny added that some selling might also be down to U.K.
inflation data due on Tuesday. Economists expect to see a reading
of around 0.7% on an annual basis.
Already last week, a survey showed that business activity in the
U.K.'s dominant services sector sputtered in December, adding to
signs the economy slowed at the end of 2014.
"Nobody has got a good word to say about [sterling]," said
Société Générale global macro strategist Kit Juckes. "And suddenly
the conversation is all leaning towards rates not rising this year
after all," he added.
Elsewhere in currency markets, the dollar rally continued, with
the euro edging down to $1.1830 and the buck also rising to
Yen118.75 against the yen.
In equity markets, meanwhile, European stocks rose Monday,
bouncing back from a sharp selloff spurred by fears that the
European Central Bank's expected asset purchase program might be
smaller than investors hope, as well as fresh slide in the price of
oil.
In early trade, the Stoxx Europe 600, rose 0.3%, having closed
the previous session 1.3% lower, Germany's DAX 30 and France's CAC
40 added 1.1% and 1.2% respectively.
Even London's FTSE 100 added 0.6%, brushing off a fresh slide in
the price of Brent crude to around $48.60 per barrel, taking losses
for oil over the last six months to over 54%. Gold was 0.9% higher
at $1,227 per troy ounce.
Write to Josie Cox at josie.cox@wsj.com
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