Sterling plunges for second consecutive day, ahead BOE decisions

Economies.com
2019-03-21 08:49AM UTC

British pound fell in the European markets on Thursday against a basket of global currencies to continue its losses for the second day in a row against the US dollar, as the certainty rises around the Brexit ahead of the EU economic summit, which comes as investors await important data from the UK on monthly retail sales, and decisions of the Bank of England at the end of its meeting on monetary policy.

 

As of 08:24 GMT, The pound fell against the dollar by more than 0.2%, trading at $1.3160, with the opening price of $1.3193, the highest at $1.3227 and the lowest at $1.3147.

 

On Wednesday, sterling lost 0.5% against the US dollar, its second loss in three days, despite the falling of the US currency against most major and minor currencies, especially after the Federal Reserve decisions.

 

The British pound fell under pressure as the British Prime Minister Theresa May called for a postponement of the country's exit from the European Union for at least three months, to prepare a new agreement with EU leaders.

 

The European Union (EU) economic summit, which is due to vote on the British government's request to postpone the Brexit until June 30, is due to start on Tuesday. In the case of rejection, the path to the chaotic UK exit from the EU will be inevitable.

 

Investors are also looking forward to important UK data on retail sales in February, which provides strong evidence of the pace of the economy in the first quarter of this year. Retail sales are one of the most important indicators of consumer spending. Representing more than 70% of the value of GDP.

 

The Bank of England warned last month that the economy may record the least growth this year since the global financial crisis in 2009, as a result of the uncertainty about the country's exit from the EU and the global economic slowdown.

 

Retail sales are expected to drop by 0.4% in February, compared to a 1.0% rise in January, with car sales excluded its expected to drop 0.4% from a 1.2% rise.

 

Investors are also closely watching the Bank of England's decisions at the end of its monetary policy meeting, seeking further evidence on the future of monetary policy and interest rates, especially after recent developments of the Brexit.

 

The bank will release its Monetary Policy Summary by 12:00 GMT. Most expectations are for the bank to set interest rates at 0.75% and to keep the asset purchase Facility unchanged at £435 billion per month.

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