The Bank of England failed to get enough offers for its planned purchase of 1.17 billion pounds ($1.52 billion) of government bonds with maturities longer than 15 years, sending gilt yields to new record lows across a range of maturities.
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The pound fell 0.60 percent on Tuesday to $1.2956, its lowest since July 11.
The pound took a sharp turn south on Tuesday (9 August), as a series of economic reports showed that manufacturing output expanded less than expected in June, while Britain’s total trade deficit widened beyond forecast.
“But (reading the BRC data) consumers do seem to have been more robust than many had anticipated and …in the BoE’s minutes last week there were members concerned that some surveys might overstate the downturn”.
Sterling fell below $1.30 against the U.S. dollar and €1.17 versus the euro for the first time in four weeks, after data released by the Office for National Statistics showed manufacturing production fell 0.3% in June compared to the month before and against analysts’ forecast for a 0.2% drop.
The dollar had seen some early gains, underpinned by Fed funds futures prices indicating that traders see nearly a 50-50 chance of a USA rate hike by December, according to CME Group’s Fed Watch tool.
Earlier in the morning, sterling passed below $1.30 for the first time since early July, as investors continued to react to the Bank of England’s first interest rate cut in seven years. The greenback was 0.38 percent weaker against the Japanese yen at 102.03.
The dollar index against a basket of currencies was little changed at 96.382.
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“[The] bank rate can be cut further, closer to zero, and quantitative easing can be stepped up”.
