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Friday, 23 December 2016

Sterling slips to two-week low vs euro


Sterling fell to a two-week low against the euro on Thursday after a survey of British consumers showing a gloomy view of the economy's prospects next year kept it on the defensive against a perky single currency.

It was sterling's fourth consecutive daily fall against the euro, its longest losing streak since August, as it got caught in the slipstream of the single currency's recovery from a 14-year low against the greenback this week.

Weakness against the euro also kept the pound anchored near a one-month low against the dollar in quiet trading ahead of the Christmas holiday period.

A big jump in households' appetite to make major purchases helped market research company GfK's monthly consumer sentiment index inch up to -7 in December from -8 in November, but this concealed a deterioration in consumers' outlook for 2017.

Expectations for the year to come are now the weakest since just after June's vote to leave the European Union, and before that they were last lower in April 2013, when the economy had suffered a period of sluggish growth.

"Both the economic and financial situation expected by consumers over the next 12 months has deteriorated, and hints that confidence will slide more clearly in the first half of 2017," JP Morgan economist Allan Monks said.

By 0900 GMT sterling was down 0.3 percent at 84.65 pence, edging further away from five-month highs of 83.05 pence touched this month.

The euro was higher against the dollar at $1.0450, up a cent from Tuesday's 14-year low of $1.0350.

Sterling slipped 0.1 percent against the dollar to $1.2341, drifting back towards Tuesday's one-month low of $1.2311.

Sterling has for the past six months been less sensitive than usual to economic data, driven more by concerns over Britain's departure from the EU. Any signs that a hard Brexit, in which Britain loses access to the single market, is on the cards have tended to drive down the currency, with signs to the contrary giving it a boost.

Reference: Jamie McGeever

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