Pound drops to fresh one-month low against the dollar

Pound sterling sank to a new one-month low against the dollar today on concerns that the global economic recovery from the Covid crisis is grinding to a halt.

The pound lost ground on the greenback, falling 0.19 per cent to $1.3913 during morning trading, a fresh one-month low. It hit an intra-day low of $1.3909.

Currencies considered more risky than safe haven assets have taken knocks this week as global risk appetite weakened on growing expectations that the rapid spread of Covid cases driven by the Delta variant will halt economic growth.

Central banks have stepped up communications recently indicating they may start to wind down the ultra-accommodative monetary stimulus measures enacted in response to the Covid crisis sooner rather than later, which has weighed on risk appetite.

Derek Halpenny, head of research, global markets EMEA at MUFG, said in a note: “With the markets priced for Bank of England action in 2022 certainly the pound will remain vulnerable to an extension of risk-off that starts to result in investors questioning the ability of G10 central banks to raise rates at all.”