Frosty reception for sterling as pound slips again

Jake Cordell
Follow Jake
Ice sign
Sterling is looking pretty weak ahead of the winter season (Source: Getty)
terling is under immense pressure again today, as it slipped below the crucial $1.27 mark for the second day in a row, setting new post-referendum lows against both the euro and the dollar.

In another brutal day for the pound, it lost 0.8 per cent against the US dollar to hit $1.2645 - a new 31-year low and well off the $1.30 mark sterling seemed to be holding before the Conservative Party Conference.

It was a similar story against the euro, with sterling drifting dangerously close to falling out of its new €1.13 range. At pixel time sterling was off 0.6 per cent at €1.1305.

Yesterday, traders said the pound should hold around its current levels until the end of the year, although political movements could cause for sharp volatility. Moreover, the risks, as the economists say, are definitely skewed to the downside. In other words, the pound is more likely to finish the year below $1.28 that it is to be above it.

While Brexit speculation is the main driver of the pound at the moment, recent strength in both the euro and dollar have shown the currency has to contend not only with its own vulnerability, but the prospect of renewed momentum behind its main trading partners.

The euro was sent surging earlier this week on rumours the European Central Bank (ECB) is planning the details on how to wind up its €80bn a month bond-buying programme.

Meanwhile, the dollar was also pushed higher after a bumper reading on some purchasing managers' indexes (PMIs) yesterday. The scores indicated the US could have added 250,000 jobs in the month of September and sent the chances of a rate rise before Christmas up from 52 per cent to 62 per cent. Analysts predict a strong jobs report tomorrow - in line or close to those estimates - could send the probability above 70 per cent.

Analysts at Argentex even predicted trends on the continent and in the US could push sterling to parity against the euro by the end of the year.

Related articles