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Sterling slips back as oil and stocks fall
January 25, 2016 / 10:15 AM / 2 years ago

Sterling slips back as oil and stocks fall

LONDON (Reuters) - Sterling fell back towards 7-year lows against the dollar on Tuesday, hit by a continuation of a slide on oil and stock markets that has added to concerns that Britain could vote to quit the European Union.

Sample polymer five and ten GB pound banknotes are seen on display at the Bank of England in London September 10, 2013. REUTERS/Chris Ratcliffe/Pool

The pound appeared to gain a foothold at the end of last week, but with expectations of a rise in Bank of England interest rates this year having collapsed, it is still close to its weakest level in a year against the euro, and resisting a first fall below $1.40 since the 2008 financial crash.

Sterling fell around a third of a percent in morning trade to $1.4197 and 76.33 pence per euro respectively.

“We are struggling a bit for more direction after the past month’s falls,” said a dealer with one international bank in London.

“It still feels like there are more sellers out there, but we have come a long way. $1.40 is a big number.”

Bank of England Governor Mark Carney is due to talk to a parliamentary committee from 1000 GMT on financial stability, and a handful of other policymakers are also speaking on Tuesday.

Fellow monetary policy committee member Kristin Forbes will say in a speech that the latest fall in oil prices allows the Bank of England “the luxury of a bit more time” before deciding if the job market is tight enough to require a rate rise.

Markets have already pushed that timeline out into next year.

Citi strategist Josh O‘Byrne pointed to the first release of fourth quarter growth data on Thursday as a possible catalyst for the pound.

“With downside risks at least partly discounted, the bigger shock from data this week would probably be with strength,” he said.

Reuters polling of economists forecasts a steady quarterly expansion of 0.5 percent.

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