The pound yesterday notched up its biggest weekly loss since January as the ‘Trump trade’ and UK economic slowdown took its toll.
Sterling was down by more than 2 per cent over the week as traders bet big on the dollar amid expectations that a Donald Trump presidency would drive up US inflation thanks to his tax-cutting and tariff-raising plans.
And it slipped to as low as $1.2612 on the day, a fresh four-month low.
Hit hard: The weekly decline versus the greenback was the seventh in a row
The pound had been as high as $1.30 prior to the election result last week.
The weekly decline versus the greenback was the seventh in a row. It means that the pound has erased all the gains it had made against the dollar so far this year.
Meanwhile, the dollar was heading for its biggest weekly gain in over a month against a basket of global currencies including the pound.
Sterling had been strengthening against the dollar prior to the election because of the expectation that the UK would keep interest rates higher for longer than the US.
That calculation has changed because Trump-driven inflation pressures could mean the US Federal Reserve moves more gradually than previously thought – though it is still seen as likely to go for a cut in December.
Fed chairman Jerome Powell added to that view in a speech late on Thursday when he said there was no ‘hurry to lower rates’ but he declined to comment on the potential impact of Trump’s policies.
The pound was also weakened yesterday by worse than expected figures from the Office for National Statistics showing the economy grew by just 0.1 per cent in the third quarter.
It is a blow to Labour’s hopes to make Britain the fastest-growing member of the G7 group of advanced economies.
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