GBP/USD Near 1.52 as Interest-Rate Bets Diverge

The pound dropped to its weakest level in 17 months against the dollar as economic data added weight to speculation that the U.K. recovery is too frail for the Bank of England to raise interest rates this year.

Sterling, in its fourth week losing ground versus the U.S. currency, depreciated against most of its 16 major peers in the past five days as reports showed manufacturing and services growth slowed last month and construction output rose less than economists forecast. Central bank policy makers meeting in London kept the benchmark rate at a record-low 0.5 percent on Jan. 8. U.K. government bonds advanced, pushing the 30-year yield to a record low.

“The pound is falling against the dollar because of the divergence view on monetary policy between the Bank of England and the Fed,” said Peter Rosenstreich, chief analyst at Swissquote Bank, referring to the U.S. Federal Reserve. “The economic momentum in the U.K. is not as strong as many believed.”


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