Published On: Wed, Oct 11th, 2017

POUND EURO LIVE: Pound falls after IMF says Brexit will hit UK economy


Sterling fell to 1.114 against the euro on Wednesday but held steady at 1.32 against the US dollar.

Markets are paying close attention to Britain’s economy performance ahead of the Bank of England’s interest rate decision in November.

Policymakers have hinted that rates will soon rise if the economy appears to remain on track.

Higher interest rates tend to strengthen a currency.

But if there are signs the Bank of England may delay a hike, the pound could take a hit.

And the latest forecasts from the IMF may have sent some jitters through markets.

The fund said UK growth is still expected to be at 1.7 per cent this year, and just 1.5 per cent in 2018.

Connor Campbell financial analyst at Spreadex.com said: “The Washington-based institution was relatively upbeat this Tuesday, stating that the world economy should grow by 3.7 per cent in 2017, up from 3.2 per cent in 2016, while maintaining those levels in 2018.

“However, the IMF wasn’t so positive about the UK, stating it was an ‘exception’ to the overall chirpy outlook due to the uncertainty of Brexit, and the subsequent impact on wages and household spending.”

The pound was hit last week amid fears of political turmoil prompted by rumours Theresa May could be ousted as leader of the Conservative party.

 

However, the pound appears to be shrugging off the latest drama in Westminister.

Michael Hewson, chief market analyst at CMC Markets said: “The pound has managed to remain fairly resilient despite the continued political breezes coming its way in the past week or so.

“Yesterday’s talk of alternative trade plans in preparation of a possibility of a no deal scenario while creating a lot of political noise didn’t appear to have caused much of a ripple on currency markets.”



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