UK pound hits 6-month low against Singapore dollar

UK pound hits 6-month low against Singapore dollar

British pound
Sterling pound notes are pictured in London. (Photo: AFP/Shaun Curry)

LONDON: The British pound fell to a six-month low against the Singapore dollar on Friday (May 25), hindered by worries over Brexit and further signs of sustained weakness in Britain's economy.

The pound fell to as low as  £1 to S$1.7851, the lowest since S$1.7784 on Nov 28 last year.

Sterling had been one of the best-performing currencies in 2018, but weak economic data and a recent surge in the US dollar have erased all of the pound's gains this year.

The British pound traded near a five-month low of US$1.33 on Friday.

Markets have drastically scaled back expectations for when and how much the Bank of England will raise interest rates, as British economic growth slows, which the central bank has partly attributed to bad weather.

Data on Friday showed the economy grew just 0.1 per cent in the first quarter, suggesting that sluggishness was more protracted. That kept the pound down.

"The 0.1 per cent growth is pretty anaemic ... the overall picture remains one of slowing economic activity," said David Cheetham, chief market analyst at XTB.

At GMT 0930 the pound was down 0.2 per cent to US$1.3353 as the dollar gained across most major currencies.

Recent weak economic data mean markets are not pricing in a full 25-basis-point hike by the end of 2018. They had expected two 25 bp rises this year.

Concerns about the sort of relationship Britain can agree with the EU before it exits the bloc in March 2019 remain a key influence over sterling.

BoE Governor Mark Carney said on Thursday the central bank could pump more stimulus into Britain's economy if this year's Brexit negotiations result in a bad deal.

Carney's comment came two days after he said the Brexit vote has cost each UK household £900.

A Reuters poll published on Wednesday suggested a one-in-five chance of a disorderly Brexit.

Analysts at CMC Markets and Commerzbank, in notes to clients, predicted the pound would fall toward the US$1.3300 level in the short term.

Source: Reuters/CNA/aj