UK sterling remains weak, approaches year lows against US dollar & euro

UK sterling is having tough time against the US dollar and the euro as late with the British pound still under pressure from more possible QE from the BOE (Bank of England) the pound is staring close to one year lows against the greenback and Europe’s shared currency.

Latest UK Sterling Exchange Rates

As of 16:08 GMT today, one pound UK sterling bought 1.16400 euro (0.08 percent lower) and against the US dollar the rate was $1.51700 (0.31 percent lower). A weaker British pound makes commodities including oil prices and gold bullion more expensive for buyers in sterling.

Bank of England Rate Decision

UK sterling continues to weaken against the other major global currencies as investors and traders size up a reasonable percentage chance that new Governor Mark Carney will mark his first Bank of England policy announcement with an increase to Quantitative Easing on Thursday. In a recent poll taken this week  gave a median 40 percent chance the central bank would top up the 375 billion pounds in QE that it has so far pumped into money markets before the end of this year.

Mr Carney votes in his first policy meeting as a BOE rate setter on Thursday and economists say the latest data suggest the central bank will refrain from adding any extra stimulus this month, but they warn it still isn’t clear if the central bank provides further support for the economy later this year.

Global Economic Slowdown

Economists also doubt the UK could weather any slowdown in the global economy. Financial markets have been rocked in recent weeks by jitters over the future pace of central bank policy in the US and a cash crunch in China, two engines of global growth.

Investor concern was sparked last month by Federal Reserve chairman Ben Bernanke, who said on June 19 that the Fed would begin slowing the pace of its $85 billion a month asset buying stimulus program by the end of 2013 and wind it up altogether in mid 2014, assuming the economy moved in line with its forecasts. His remarks triggered a sharp sell off in stocks, government bonds and other assets.

“We remain highly skeptical that the UK’s ‘splendid isolation’ can be sustained against the backdrop of a faltering global economy,” said Ross Walker, an economist at Royal Bank of Scotland.

Britain’s economy has flat lined for more than two years, only narrowly avoiding an unprecedented triple-dip recession, and is expected to experience tepid growth at best through next year. Still, data out late last month showed that the UK’s economy grew 0.3 percent in the first three months of the year and business surveys have pointed to a solid start to the second quarter.

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UK sterling remains weak, approaches year lows against US dollar & euro