The pound is weaker against the dollar and is still struggling against the euro. Yesterday, sterling saw its lowest level against the greenback in almost 11 weeks. This weakness comes from the combination of dollar strength and a dovish speech from Bank of England Governor, Andrew Bailey.
Following warnings from Chief Economist, Andy Haldane, that inflation could rise to 4% later this year, Bailey seemed unfazed and assured markets that the current rise in inflation was temporary. Speaking yesterday, he said, “it is important not to over-react to temporarily strong growth and inflation, to ensure that the recovery is not undermined by a premature tightening in monetary conditions.”
As a result, sterling has suffered, and currencies whose central banks are starting to ‘normalise’ monetary conditions, such as the euro and dollar, are benefiting.
The pound has also been hit by weak UK data, with Manufacturing PMI missing estimates.
