Sterling is currently at its lowest level in 5 months against the US dollar, at approximately $1.51. With global demand for the UK’s goods and services weakening an interest rate rise will be delayed. The Euro has also strengthened in recent weeks against Sterling with the pound currently at 1.35 Euro, having been as high as 1.44 in July.
The Euro has been boosted recently as Mario Draghi, the head of the European Central Bank gave the single currency a boost by saying that further quantitative easing had not been decided. Previously, he had said that he would implement further stimulus when deemed necessary.
Sterling has weakened against the US dollar due to remarks stating that an interest rate rise is likely before Christmas by Janet Yellen, the head of the Federal Reserve. With the likelihood of an interest rate hike before the end of the year in the US and one later in the UK, Sterling has weakened.
Sterling has been weak recently as concerns about the global economy dominate the pound. Also, last week one Bank of England (BoE) member, Andrew Haldane said that the BoE may possibly cut the interest rate! The Euro has benefited from the positive signs from Greece recently and with the elections over in Greece, some stability has resumed.
UK data recently has shown that the economy is not as strong as previously thought with the dominant services sector recording its weakest growth in more than two years last month and weak manufacturing output has has put further downward pressure on Sterling.
