POUND LIVE: Pound nears 8-month low against euro ahead of Bank of England update

Sterling eyed eight-month lows against the euro, falling around 0.2 per cent to 1.116, but was broadly flat against the US dollar at 1.302.

Britain’s currency could be boosted if monetary policymaker Mr Haldane provides signals that he will vote for an interest rise at the Bank of England’s next meeting in August.

The chief economist recently surprised markets when he said he could call for a hike later this year.

The comments helped build expectations of a rate rise, but a fall in inflation last month made the likelihood less likely.

Craig Erlam, senior market analyst at OANDA, said: “We’ll hear from Bank of England policy maker Andy Haldane this evening, which should be interesting given his recent comments on interest rates and the dip in the inflation data.”

The euro has gained ground against both the pound and the dollar after the past week, amid expectations the European Central Bank (ECB) will scale back support measures for the economy.

If markets are left disappointed and there is no move by the policymakers, the euro could fall.

The US dollar has also been hit by fears that Donald Trump will struggle to push through economic and tax reforms. 

Experts said the pound could move higher against the dollar if the President’s agenda continues to take a knock.

Markets are also focused on the latest moves by the American central bank the US Federal Reserve.

Joshua Mahony, market analyst at IG, said: “Part of the recent deterioration in the US dollar has been associated with the impact declining US economic data will have upon the outlook for the Fed’s interest rate pathway.

There is no doubt that the US President has faced substantial headwinds to passing his reforms, and being such a controversial and polarising figure means there is a good chance that many of the reforms that drove the dollar and stocks higher may never see the light of day.

“Today sees the start of the latest FOMC meeting, yet with markets only seeing around a 50 per cent chance that the Fed will raise rates by year end, it is clear that the focus will be focused on linguistics and talk of balance sheet normalisation.”

More to follow…