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Sterling Dips Below $1.21 After Dollar Jump, BoE Cut to Growth Estimates

Sterling declined to a 30-month low on Thursday below $1.21, pressed by a stronger greenback, refilled worries about a no-deal Brexit and the Bank of England reducing its economic development estimates.

The pound declined to a low of 1.2085, its poorest since January 2017. It came after the U.S. Federal Reserve’s less dovish than expected policy meeting on Wednesday pushed dollar buying, and before the BoE kept rates of interest on hold; however, lower its growth estimates amid mounting Brexit risks.

Sterling was last down 0.4% at $1.2111, while versus the euro it was fixed at 91.055 pence EURGBP=D3.

The pound shed over 4% of its value in July, its weakest month since October 2016, following new Prime Minister Boris Johnson’s promise to exit the European Union on Oct. 31 whether or not a transformation deal can be agreed with Brussels.

This sparked fears among traders that Britain was on course for a disruptive divorce after 46 years in the world’s largest trade bloc.

The BoE kept rates on hold at 0.75% on Thursday; however, gave no sign it was contemplating lowering rates of interest like other central banks.

The pound was little shifted by the announcement, floating near the $1.21 mark. BoE Governor Mark Carney was to hold a press conference at 1130 GMT.

Money traders are pricing in a 25 basis point rate reduction by the BoE before March 2020.

On the Bank of England’s trade-weighted index, which ranks sterling against its trading partners’ currencies, the pound has declined to its lowest since early November 2016, having fallen over 7% since early May.

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Nina Sanders

By Nina Sanders

Nina is the lead of the Currency column. She had joined the group as a part-time writer in 2006, covering the stock market, startups, earnings, and economy. Nina completed her Bachelors of Arts degree from the University of California specializing in Journalism and Geography.

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