Sterling weakens against the dollar but firms slightly against the euro ahead of Burnham speech
FXB•Sterling fell 0.2% to $1.3226, near a three-month low, while the euro slipped 0.1% to 85.72 pence as traders awaited Prime Minister Andy Burnham’s conference speech.
1. Sterling moves unevenly
The pound fell against the dollar on Tuesday, in line with a broader strengthening of the US currency, but edged higher against the euro for a third consecutive day. Elevated US bond yields and oil prices contributed to the dollar’s gains.
2. Burnham speech awaited
Burnham was due to deliver his first Labour Party conference speech as prime minister, promising an “honest conversation” about trade-offs in addressing issues including social care and utility control. The speech may not have a dramatic effect on markets.
3. Fiscal concerns remain
Finance minister John Healey’s pledge of fiscal responsibility had supported sterling and British government bonds on Monday. Societe Generale analyst Kenneth Broux said the government would need to do more to convince gilt investors it was serious about stabilising spending. Bank of England data also showed unsecured household lending in August rose at its fastest annual pace since at least 1993.
