Thursday, August 21st, 2025
Home »Money and Banking » World » Sterling sags against dollar

Sterling eased against the dollar on Friday after briefly testing the previous day's one-month high, in line with moves in major currencies. Stronger than expected US economic growth data bolstered the case for higher US yields and interest rates and briefly hit the pound in New York trading hours.

The prospect of a wider US interest rate advantage compared with euro zone and UK interest rates overshadowed hawkish comments from the Bank of England Governor Mervyn King earlier in the week.

His comments dampened expectations for lower interest rates, following the BoE's cut in August, the first in two years. Official interest rates in Britain stand at 4.5 percent.

"The dollar is picking up some support from the better-than-expected GDP data and that's pulling down sterling," said Ian Stannard, currency strategist with BNP Paribas.

At 1443 GMT sterling held to $1.7795, down 0.15 percent from Thursday's closing levels. The pound was unchanged against the euro at 68.07 pence.

The US economy grew at an annualised rate of 3.8 percent in the third quarter, exceeding market expectations for growth of 3.6 percent.

British government debt fared better than euro zone government debt, squeezing the spread between long maturities to the narrowest in eight months. But real money investors resisted chasing higher yields this week.

Copyright Reuters, 2005


the author

Top
Close
Close