Pound Slides to Week-Low as Construction Adds to Economic Woes

  • Sterling is once again worst-performing G-10 currency of 2016
  • Brexit concerns already weighing on economic data: DZ Bank

The pound fell to its lowest level in more than a week against the dollar as construction became the latest sector to signal Britain’s economy is losing momentum with the nation heading for a referendum that may push it out of the world’s largest trading bloc.

Sterling also slid versus the euro after Markit Economics said its construction gauge fell to 52 last month, compared with the 54 median prediction of economists in a Bloomberg survey. The currency pared losses against the greenback after a private report showed lower-than-forecast U.S. jobs gains in April.

The pound, which briefly erased its 2016 losses against the dollar on Tuesday, has now reclaimed its place as the worst-performing Group-of-10 currency, with the declines partly driven by investors pricing in the prospect of economic disruption if the nation votes to leave the European Union next month.

“There are risks to sterling, especially if we look at the Brexit scenario,” said Soeren Hettler, a senior foreign-exchange analyst at DZ Bank AG in Frankfurt. “The fundamental data is weaker than we saw earlier in the year but with this uncertainty on Brexit, this isn’t a surprise.”

The pound fell 0.4 percent to $1.4477 as of 4:06 p.m. London time, after reaching $1.4462, the lowest level since April 25. Sterling weakened for a fourth day versus Europe’s shared currency, losing 0.4 percent to 79.39 pence per euro.

The U.K. currency may weaken to beyond 80 pence per euro before the June 23 referendum, Hettler said.

U.K. government bonds were little changed, with the 10-year gilt yield at 1.53 percent. The price of the 2 percent security due in September 2025 was at 104.08 percent of face value.

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