Pound Sterling hits six-month low as Brexit and economic gloom deepens

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(qlmbusinessnews.com via news.sky.com– Tue, 9th July 2019) London, Uk – –

Sterling has weakened further just at the time when many UK holidaymakers are preparing to exchange their pounds.

The pound has slipped to a fresh six-month low against the dollar as sustained worries over Brexit and the UK economy weigh on the currency.

Sterling was half a cent down, at less than $1.25, taking it to its weakest point since a “flash crash” in January and not far off its lowest level since early 2017.

It was also lower versus the euro, slipping close to €1.11 – close to six-month lows – and adding to anxieties for UK holidaymakers preparing to travel abroad over the summer.

Britons will find their pound does not stretch as far compared with the same time last year, when it was trading at around $1.33 versus the dollar and €1.13 against the euro.

The latest fall against the dollar extends two weeks of declines for the pound amid concerns about the weakening economic outlook, prompting speculation about lower interest rates.

A recent gloomy speech by Bank of England governor Mark Carney was taken by some as a hint that the policy makers may strike a more dovish tone on rates.

Business surveys have indicated that the UK economy probably shrank in the second quarter of 2019, leaving it potentially on the verge of recession – as a potential no-deal Brexit looms on 31 October.

Sentiment was further dampened on Tuesday as Ireland's finance ministers said it now thinks there is a significant risk of a disorderly departure of the UK from the EU and that it was taking measures to protect itself from any legal consequences.

Meanwhile, the British Retail Consortium reported the worst June decline in sales since its records began in 1995, pointing to a “bleak” picture as consumers put off non-essential purchases due to Brexit uncertainty.

Trading was also impacted on Tuesday by the strength of the dollar as traders reassessed their expectations about US interest rates.

Stronger than expected jobs data last week has prompted investors to question expectations about how much the US Federal Reserve will cut rates later this month.

The pound's latest weakness also comes ahead of official monthly growth figures on Wednesday and the Bank of England's Financial Stability Report on Thursday.

By John-Paul Ford Rojas, business reporter