bruised by UK credit rating downgrade
LONDON, Feb cheap Canada Goose 25 Canada Goose Coats On Sale (Reuters) Sterling fell to its weakest since July 2011 against a basket of major canada goose black friday sale currencies on Monday, the first trading day after Moody stripped the UK of its triple A credit rating.
Further falls in the pound were expected in the coming weeks given the grim outlook for the British economy, the prospect of more monetary easing and growing evidence that the Bank canada goose sale womens of England is comfortable with a falling currency as buy canada goose jacket it seeks to rebalance the economy and encourage exports.
will remain nervous about the pound, said Ian Gunner, portfolio manager at Altana Hard Currency Fund. policy will now be more significant and canada goose factory sale the minutes last thecanadagooseoutlet week showed more easing could be on the way.
Financial markets had been braced for a rating cut canada goose uk outlet for some time because UK growth was sluggish and finance minister George Osborne Canada Goose online missed a series of debt reduction targets. canada goose coats It had, however, been expected to come after the budget, on March 20.
Political pressure was building on Osborne to change course and do more to foster growth. While analysts expect his budget to stick canada goose uk shop to deficit busting measures, tension within the ruling coalition could undermine the pound in coming weeks.
Sterling fell as low as $1.5073, its weakest since mid July 2010. Traders said sellers would re emerge if sterling showed any signs of rebounding towards $1.53. Its trade weighted index hit uk canada goose outlet a 19 month low of 78.10. The euro rose 1.6 percent to a 16 canada goose store month high of 87.98 pence.
The pound has lost canada goose uk black friday nearly 7 percent against the dollar and 7.3 percent against the euro this year.
GRIM canada goose PROSPECTS The options market showed investors canada goose coats on sale were expecting sharper moves in the pound. One month euro/sterling implied volatility a measure of future price swings hit a 14 month high of 10.1 percent while one month sterling/dollar volatility was at its highest since June.
Investors were increasingly buying options betting on longer term weakness in the pound, traders said.
The credit downgrade compounds pressure on the pound that emerged last week after minutes canadian goose jacket of a BoE policy meeting showed officials, including Governor Mervyn King, edged closer to another round of the bond buying programme that pumps more money cheap canada goose uk into the economy a policy known as quantitative easing (QE).
The canada goose clearance sale bank quarterly report earlier this month also said policymakers uk canada goose were canada goose clearance prepared to tolerate higher inflation to support growth.
Such monetary easing is seen as hurting a currency as it involves the central bank printing more money to buy bonds. That increases the supply of the currency and erodes its value.
Analysts said that by tolerating higher inflation in the coming years, real or inflation adjusted Canada Goose sale returns for investors would diminish, making the pound and UK assets less attractive.
Data from the Commodity Futures Canada Goose Jackets Trading Commission showed more speculators building bets against the pound in Canada Goose Online the week ended Feb. 19, after they flipped from bets in favour of the currency a week earlier.
Bets against Canada Goose Outlet the pound may have some way to go, buy canada goose jacket cheap with net short positions just a fraction of the Canada Goose Parka nearly 80,000 contracts in place when sterling fell to below $1.45 in May 2010.