Worst Week for Sterling in Nine Months

The Great Britain pound posted this week the biggest weekly drop against the US dollar in nine months on the speculation the fragile UK economy will force the nation’s central bank to keep the interest rates at the record low level.
Virtually all the fundamental data this week was negative for the pound. Be it house prices, industrial production or producer price index, all the indicators signaled about the worsening state of Britain’s economy. It wasn’t surprise to see the Bank of England maintained its extremely stimulating policy, but it also reinforced the pessimistic outlook about the future of the UK economy and currency.
The sterling was declining against the dollar and the yen for almost a whole week and posted the third weekly drop in a row. The currency was also weakening against the euro at the first half of the week, but sharply advanced in the second half as the concerns about the problems of the European Union intensified.
GBP/USD dropped from 1.6150 to 1.5878 over the week. GBP/JPY slipped from 124.20 to close at 123.20. EUR/GBP fell from 0.8765 to 0.8598, the lowest level since March, after it rose to 0.8842 earlier this week.

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