Pound plummets to four-month low against the dollar on disappointing inflation figure
Sterling dropped to a four-month low against the dollar in morning trading, after figures by the Office for National Statistics showed UK inflation slid to 1.6 per cent in July.
The pound dipped 0.61 per cent against the dollar to below $1.663, its lowest level since April. Against the euro, it fell 0.32 per cent, dropping below €1.246 for the first time since the end of July, making sterling one of today's worst-performing currencies.
Sterling slid to a four-month low against the dollar today (Source: Yahoo Finance)
Although the figures put sterling among today's worst-performing currencies, the slide will come as a slight relief to businesses: among major currencies, sterling was the top performer in the year to July, causing headaches for companies with heavy international exposure. Yesterday, Lloyd's of London insurer Amlin blamed an eight per cent fall in profits on the strong pound.
All eyes, then, on minutes of the Monetary Policy Committee's August meeting, to be published tomorrow. Last month, members of the Bank of England group gave hints they were more relaxed about the possible impact of higher interest rates on recovery, although last week governor Mark Carney made decidedly dovish comments, saying the MPC will "be placing particular importance on the prospective paths for wages and unit labour costs".
Considering wages showed their lowest annual growth since 2001 last week, an interest rate hike before the beginning of next year, as most analysts expect, looks unlikely.