Pound Halts Winning Streak as Seven-Day Rally Seen OverblownBy
Sterling falls even as U.K. consumers support growth data
‘Profit taking’ likely follows the pound’s recent rally: ING
The pound snapped a seven-day winning streak as some investors judged the rally was overdone.
Sterling declined versus all of its Group-of-10 peers, paring losses after preliminary third-quarter data showed gross domestic product growth met estimates and showed stronger consumer spending. The figures came after Chancellor Philip Hammond said in his Autumn Budget on Wednesday that the Office for Budget Responsibility had slashed its growth forecasts.
Consumers drove the British economy in the third quarter as spending on cars rebounded, but there were signs Brexit appears to be taking a toll on business investment. Overall GDP rose an unrevised 0.4 percent, up from 0.3 percent in the previous three months.
“There’s probably a bit of profit taking” following the pound’s rally, said ING Groep NV currency strategist Viraj Patel. “The next big rally will come from a hawkish re-pricing of Bank of England policy expectations. However, this is contingent on Brexit progress, as most things are these days.”
With the clock ticking down to a December European Union summit, the U.K. hopes to get agreement to move Brexit talks onto trade, with the market looking for signs of a breakthrough. Both sides are said to be collaborating on a joint document on the progress made so far.
The pound fell 0.2 percent to $1.3300 by 10:30 a.m. in London, after erasing overnight gains to touch a session low of $1.3285. It weakened 0.4 percent to 89.04 pence per euro. The yield on U.K. 10-year government bonds fell two basis points to 1.25 percent.