| LONDON, Sept 16
LONDON, Sept 16 Sterling slipped against the
dollar and euro on Friday and was on track for its worst week in
five on a trade-weighted basis, as investors worried about
Britain's vote to leave the European Union and bet on another
cut in interest rates this year.
The Bank of England kept rates at their record lows at
Thursday's policy meeting but signalled that it would cut them
again before the end of the year. It cut rates to 0.25 percent
in early August and relaunched an asset-purchase programme to
cushion the economic blow from Brexit.
Since then, though, economic data pointed towards a less
significant hit to the British economy than had been expected.
That helped lift sterling to a seven-week high of $1.3445
last week, more than 5 percent above the three-decade
low it had plumbed in the aftermath of the vote.
But with the British parliament back in session and focus
returning to the uncertainty surrounding the UK's negotiations
to leave the bloc as well as the prospect of further monetary
easing, sterling has since slipped almost 2 percent.
It fell 0.3 percent on Friday to $1.3203.
"Whereas a month ago the market was in a phase of relief
that the impact of the referendum hadn't been that big after all
... I think there is now more of a focus on the fact that Brexit
hasn't actually begun yet, and there could still be a rocky ride
for the economy," said Rabobank currency strategist Jane Foley.
Sterling also fell 0.2 percent to 85.12 pence per euro
. Against the BoE's trade-weighted basket of
currencies, it was down 0.8 percent for the week - the
worst performance since early August.
"Euro/sterling still flirts with the 0.85 mark," wrote
Commerzbank strategists in a note to clients. "The outlook is
dominated by the government's plans for Brexit. And they are
still unknown. As long as that remains the case long positions
in sterling entail significant risks."
(Editing by Jeremy Gaunt)