Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Sterling weakens below $1.33 for first time in 2021

Published 26/11/2021, 09:03
Updated 26/11/2021, 16:00
© Reuters. FILE PHOTO: British Pound Sterling banknotes are stacked in piles at the Money Service Austria company's headquarters in Vienna, Austria, November 16, 2017. REUTERS/Leonhard Foeger/File Photo

© Reuters. FILE PHOTO: British Pound Sterling banknotes are stacked in piles at the Money Service Austria company's headquarters in Vienna, Austria, November 16, 2017. REUTERS/Leonhard Foeger/File Photo

LONDON (Reuters) - Sterling briefly weakened below $1.33 on Friday for the first time since December 2020 as a new COVID-19 variant described as the most concerning yet hit sentiment in global markets.

The pound later recovered back above $1.33 but was down 0.8% against the euro.

"London is naturally highly exposed to new strains (of the coronavirus) given its high volume of travellers, and markets will be on the lookout in the coming days for any evidence the new variant has already reached the UK, with obvious downside risks for the pound," said ING analysts.

Concerns it might be harder to combat the new variant found in southern Africa with vaccines also prompted investors to scale back their expectations for a Bank of England (BoE) interest rate rise in December, adding to downward pressure on the pound.

Sterling has been falling in recent weeks - in October it traded above $1.38 - sent lower first by disappointment the BoE did not raise rates this month and more recently by worries over slowing economic momentum and growing expectations of tighter monetary policy in the United States, which has boosted the dollar.

After falling to as low as $1.3278, sterling had recovered to $1.3318 by 1530 GMT, unchanged on the session.

Sterling vs U.S. dollar

To view the graphic, click here: https://fingfx.thomsonreuters.com/gfx/mkt/egvbkarqkpq/sterling.PNG

Versus the euro, it shed 0.8% to 84.82 pence, its weakest since Nov. 16.

Stocks fell sharply across the globe as news of the new variant shattered investor confidence. Riskier currencies such as those in emerging markets or linked to commodity prices fell hard. Sterling while lower remained relatively resilient.

© Reuters. FILE PHOTO: British Pound Sterling banknotes are stacked in piles at the Money Service Austria company's headquarters in Vienna, Austria, November 16, 2017. REUTERS/Leonhard Foeger/File Photo

BoE Governor Andrew Bailey said on Thursday central banks took risks when they sought to provide guidance on what is likely to happen with rates - an apparent pushback on his predecessor's preference for forward guidance.

Bailey was accused by some investors of sending a wrong signal about the likelihood of a BoE rate hike earlier this month.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.