The British pound fell on Wednesday to a fresh three-month low against the dollar in the wake of underwhelming Eurozone economic data.
It comes as the US dollar appears to be reigning over other currencies.
On September 6 at 5pm, GBP was worth 1.2498 dollars, down 0.54 percent – the lowest level recorded since June.
The pound was also worth 0.47 percent lower against the Euro – with the pound valued at 1.165 euros at market close in London.
Joe Manimbo, senior currency analyst at Convera, told PoundSterling Live: “The greenback is riding a seven-week winning streak, a rally partly driven by fading expectations for the US central bank to cut interest rates from 22-year highs above five percent anytime soon.”
The poor performance of various currencies against the dollar comes hours after data released on Tuesday showed the Chinese service sector growing at the slowest pace so far this year and the Eurozone’s services activity contracting further than expected in August.
On the other hand, an update on UK retail prices released on Tuesday by the British Retail Consortium (BRC) showed the sector experienced a 4.1 percent increase in August, compared with a growth of 1.0 percent in August 2022, suggesting inflation is easing.
On Wednesday, Bank of England (BoE) governor Andrew Bailey told the Parliament Treasury Committee the UK economy was now “much nearer the top of the cycle” on interest rates on the basis of current evidence.
The BoE raised interest rates to 5.25 percent in August.
Mr Bailey suggested there may not need to further increase interest rates, as he said the British economy has moved on from the place it found itself when the need for a rise was clear.
He told MPs: “We are not, I think, in that place anymore. And that’s why we shifted our language to being much more evidence and data-driven, that was important.
“We also introduced in August very deliberately the point that we think the policy is now restrictive in its impact. And I say that because I think the judgement is now much finer.”
He added that the decision would largely hinge on the labour market.
The BoE governor stopped short of providing firm guidance on interest rates ahead of the Monetary Policy Committee meeting on September 21.