LONDON (Reuters) - Bank of England policymaker Martin Weale said on Wednesday there was a risk of a sharp fall in sterling because of the country’s large balance of payments deficit.
Britain’s current account deficit was equivalent to 6.0 percent of gross domestic product in the third quarter of last year, matching the biggest deficit on record.
“Certainly it seems to me that there is a risk of a sharp movement in the exchange rate. I would be inclined to say more of a risk of a sharp downward movement,” Weale said after giving a speech in London. “The economy always springs surprises, and what’s been happening to sterling in the last few weeks has been one of those surprises.”
Weale’s comments echoed ones he made in February.
Sterling fell to its weakest level against the dollar in 20 months on Wednesday as the U.S. currency surged broadly due to growing expectations of an interest rate increase by the Federal Reserve in the coming months.
Reporting by Andy Bruce, writing by William Schomberg; Editing by Gareth Jones