Bookmakers altered the odds of a Brexit from 29 per cent to 33 per cent and the price of insurance against devaluation soared to a four-year high in the options markets yesterday, as banks repeated their warnings that sterling could slump as low as $1.20 if Britain quits the single market — a level not seen since 1985.
Tokyo (AFP) - The British pound surged to a more than two-year high against the euro Friday, while it also rallied against the dollar as early results suggested Scotland will vote against independence from the United Kingdom.
LONDON: Sterling fell to a one-month trough against a broadly stronger euro on Wednesday after data showed British wage growth slowed more than expected in June, taking some pressure off the Bank of England to raise interest rates. The BoE is closely watching the labour market as it judges when to raise rates for the first time since the start of the financial crisis in 2008.
LONDON: Sterling powered to its strongest in 7-1/2 years against a trade-weighted basket of currencies on Tuesday, as better-than expected UK inflation data bolstered bets that the Bank of England will raise interest rates in the coming months. The numbers from the Office for National Statistics showed consumer prices rose 0.1 per cent in July, beating expectations that inflation would remain stuck at zero. Core inflation, which strips out food, energy, alcohol and tobacco prices, hit a five-month peak of 1.2 per cent, up from 0.8 per cent in June.
With the euro already weakened by the Greek debt crisis, comments on Thursday by the Bank’s governor, Mark Carney, pointing to dearer borrowing around the New Year pushed sterling to levels last seen in the month following the collapse of Northern Rock in the autumn of 2007.
By Tom Lydon:
With the British economy teetering on another recession, market observers are anticipating new stimulus measures from the Bank of England, driving the British pound currency, along with a related exchange traded fund, to a three-year low.The CurrencyShares British Pound Sterling Trust (FXB) dropped 4.4% over the past three months.
The number of people out of work fell to 1.68m in the quarter to November, bringing the overall rate down to just above 5 per cent.
The Office for National Statistics, which compiled the data, said the jobless rate was the lowest since January 2006.
The figures marked the first time that the UK jobless rate has returned to its pre-crisis average since the crash. The employment rate was also strong, hitting a fresh all-time high of 74 per cent.
The Canadian dollar wallowed at four-year lows early on Thursday after the Bank of Canada all but begged the market to sell the currency, while sterling took off as investors priced in an earlier start to rate hikes in the UK.
The loonie was trading at 89.68 US cents at 7 a.m. Thursday, bringing its decline this year to 4%. It fell nearly 7% for the whole of 2013.
“The Bank appears to have few qualms about tossing the “strong” loonie under the bus to achieve its inflation target, said Sal Guatieri, with BMO Capital Markets.