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GBP/USD Drops Sharply to 1.63 as U.K. Output Slows

The pound slid for a fifth day against the dollar after a report showed U.K. manufacturing expanded less in January than economists had forecast.

Sterling tumbled against all but two of its 16 major peers as investors bet Bank of England officials will commit to keeping interest rates lower for longer in their quarterly Inflation Report on Feb. 12. The pound weakened the most since March versus the euro as Hometrack Ltd. data showed a measure of U.K. house prices rose 0.3 percent in January after climbing 0.5 percent a month earlier. U.K. government bonds erased a decline.

“The data that we’ve had since the start of the year have been good but many people have been disappointed it hasn’t been better,” said Jane Foley, senior currency strategist at Rabobank International in London. “That’s taken some of the froth out of expectations for performance of the U.K. economy and sterling.”

Bloomberg [1]

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