Pound Sterling (GBP)

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Why did the pound drop?

BBC Radio 5 live

Pounds coins and notes
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Yesterday the pound dipped below $1.30, but why now?

“Part of that is dollar strength, dollar has been strong across all currencies...but the pound has weakened against the euro," Supriya Menon, senior multi-asset strategist at Pictet Asset Management tells Wake Up to Money.

"And there are couple of factors at work - one is increasing speculation of a no-deal Brexit, which would weigh on the pound, but also this week we've had a string of releases which are a surprise on the downside.

"We've had a more downbeat view of growth and inflation in the UK, so we’re not surprised by them, but they are starting to be reflected in the markets."

Pound drops

Pounds sterling
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Sterling remains frail after being hit on Wednesday by weak inflation data.

Ongoing political turmoil related to Britain's plans to leave the European Union has also served as a lingering drag on the pound.

The pound is trading 0.33% down at $1.3026, after hitting a 10-month low of $1.3010 on Wednesday.

Pound slips on inflation announcement

Pounds, dollars and euros
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The pound has stumbled following the latest UK inflation figures, which failed to rise as expected in June.

Sterling is now down 0.6% against the dollar to $1.3037.

Sterling 'in for a bleak day'

Bank of England

Monex Europe's market analyst Bartt Hordijk doesn't think the Bank of England's proposed rate hike is certain, following today's consumer price inflation figures.

"Expectations that higher oil prices would filter into the headline inflation rate, along with seasonal effects boosting demand pull inflation, now look overstretched especially with core CPI moderating to below the 2.0% target," he says.

"Sterling’s knee jerk reaction, carving lows not seen since September 2017, evidences how over-inflated expectations were on the Bank of England’s upcoming decision.

"Today’s soft inflation reading will do little to knock the Bank of England off of their implied course, but tail risk of the ‘unreliable boyfriend’ resurfacing has increased.

"Sterling looks to be in for a bleak day, especially as Theresa May will have to fend off grilling during today’s Prime Minister’s Questions."

Pound recovers after Trump hit

Pound dollar

The pound has recoved some of its early losses against the dollar.

Early on it fell, which traders blamed on comments from President Trump who seemed to rule out any kind of trade deal with the UK after Brexit.

But in a press conference at Chequers he appeared to backtrack on that.

"Whatever you do is OK with us, just make sure we can trade together, that's all that matters. This is an incredible opportunity for our two countries and we will seize it fully," Mr Trump said.

The pound is trading at $1.3174. Earlier it almost dropped below $1.31.

Pound in the doghouse

So what do commentators make of the morning's market movements?

The European markets lost a bit of their shine as Friday went on, while the pound remained in the doghouse against the dollar. Dropping 0.6%, sterling now finds itself at its worst price since the end of June, with cable trading the wrong side of $1.3125. The currency has really taken Trump’s threat, that Theresa May’s ‘soft’ Brexit would kill a trade deal with the US, hard, the pound also falling 0.3% against the euro. Though a lack of US trade agreement would also be awful for the FTSE, the index chose to indulge in sterling’s losses, rising 0.4%. That increase was, however, a reduction on the index’s initial growth, with the FTSE slipping back under 7700.

Connor CampbellFinancial analyst, Spreadex

Midday update: FTSE up, pound still down

Let's check in on the markets now - and shortly after midday the FTSE 100 was still ahead at 7,683.45m that's a rise of 32 points or 0.42%.

The FTSE 250 was at 20,892.41, up 113 points or 0.54%.

However, the pressure on the pound, sparked by President Trump's comments on the PM Brexit plan, continued.

It was down by 0.62% against the dollar at $1,3124 and down by 0.27% against the euro at €1.1286.

Pound hit by Trump comments

Sterling and dollar
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The pound has fallen by more than 0.5% against the dollar, following President Donald Trump's remarks on Theresa May's Brexit plan.

It's at $1.3134, that's a fall of 0.54%.

President Trump said the PM's new white paper, published on Thursday, "would probably kill" hopes of a us-UK trade deal.

Markets are also worried that the EU will demand more concessions from Britain before agreeing to a Brexit deal.

The pound is down 0.22% against the euro at €1.1291.

Weak pound lifts FTSE

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We've got that split again where the FTSE is not necessarily rallying on massive confidence and risk appetite but ... more to do with sterling weakness that anything else. But the resilience is still there."

Mike van Dulkenhead of research at Accendo Markets