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Sterling edges lower as Britain maintains fierce stance on Brexit

Reuters | Updated: 15-05-2020 14:26 IST | Created: 15-05-2020 14:26 IST
Sterling edges lower as Britain maintains fierce stance on Brexit

Sterling was down by 0.2% on Friday against both the dollar and the euro as a combination of Brexit risks and a coronavirus-induced economic slowdown put added pressured on the UK currency. Sterling fell as the government reiterated its refusal to extend the Brexit transition period this December and said it is not keen to compromise in trade negotiations with the EU.

"The sterling outlook remains negative as the latest round of Brexit negotiations this week didn’t show any signs of progress in key areas," said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank. "The increased pricing in of a no-deal Brexit should further weigh on the pound and encourage a further retreat toward the $1.20 level, and possibly below," she said.

Sterling is in its fifth consecutive day of losses and is the worst-performing G10 currency so far this month, having fallen more than 2.2% against the dollar since the end of April. The pound was down 0.2% versus the U.S. dollar at $1.2209 , not far from the five-week low of $1.2166 it reached the previous day. It was also falling versus the euro, last by 0.3% to 88.59 pence.

The UK's death toll from COVID-19, the disease caused by the new coronavirus, has topped 40,000, by far the worst yet reported in Europe. London's Canary Wharf, one of the most powerful financial centres on earth, has drawn up detailed plans to bring bankers, accountants and lawyers back to the office after weeks of lockdown, the Financial Times reported on Friday.

More than 440,000 self-employed workers in Britain applied for a government aid programme that will give them a grant of up to 7,500 pounds ($9,142) during its first day of operation, finance minister Rishi Sunak said on Thursday. Britain's economy shrank by a record 5.8% in March and an even bigger hit is expected in the coming months. The Bank of England said last week that the contraction of the economy in the April-June period could approach 25% and lead to the largest annual decline in more than three centuries.

The Bank of England's Governor Andrew Bailey said that the bank is not considering pushing interest rates below zero, although he declined to rule it out altogether. More quantitative easing by the Bank of England in June is widely expected, which would hurt sterling.


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