Pound Pares Weekly Advance as Rally Fueled by May, Carney Fadesby
Sterling declines after BOE official says ‘easing required’
Dollar gains as U.S. sales data beat economists’ forecasts
The pound declined Friday, reversing earlier gains versus the the dollar, after better-than-expected U.S. retail sales and manufacturing data added to signs that the world’s largest economy is gaining traction.
Sterling weakened against most of its Group-of-10 peers as BOE Chief Economist Andy Haldane signaled policy easing will likely be required to bolster the U.K. economy after the country voted to leave the European Union. The pound pared its best week since March against the U.S. currency, having advanced earlier as the appointment of Theresa May as Prime Minister returned a sense of political stability to the U.K. and the Bank of England unexpectedly kept interest rates unchanged.
“Once we got the stronger data we’ve seen general dollar strength across the board,” said Bilal Hafeez, global head of foreign-exchange research at Nomura Holdings Inc. in London. “It turned against most of the currencies, including the euro and the pound.”
The pound declined 1.1 percent to $1.3194 as of 5:03 p.m. London time, having climbed earlier to $1.3481, the highest since June 30. That pared this week’s gain to 1.9 percent, the most since March 4. Sterling weakened 0.6 percent to 83.81 pence per euro. It strengthened 1.7 percent in the week, the most since May 27.
The U.K. currency’s rally this week came after it fell to the lowest level against since 1985 against the dollar last week, and it remains about 11 percent lower since the country’s June 23 vote on EU membership.
Even with the decline Friday, the pound strengthened against all but one of its 31 major peers this week amid a clearer political landscape in the U.K. after May took office and appointed a new cabinet. Sterling was also supported by speculation the central bank may take a less aggressive approach than was initially expected in its measures to contain the fallout from a Brexit, after BOE officials unexpectedly voted to keep rates unchanged Thursday.