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Friday 29th of August 2008
June 30, 2005

Sterling falls on economic data


by Brian Turner
Sterling falls on economic data

Sterling fell in relation to the US dollar, the euro, the yen, and the Swiss franc again on Thursday on several pieces of negative economic news.

First quarter economic growth was revised downward to 0.4 percent on a quarter-to-quarter basis. The annual growth of the gross domestic product also was revised downward, to 2.1 percent from 2.7 percent.

Analysts believe that these figures make it more likely than ever that UK interest rates will be cut in August as the risks of inflation recede.

And in fact, the annual inflation rate fell to 4.1 percent with the decline of seasonally adjusted house prices by 0.2 percent in June.

Additionally, the current account deficit was up to 2 percent of the gross domestic product in the first quarter of this year, up from 1.4 percent in the previous quarter.

All of this sent sterling down 1.4 cents to $1.7933 in relation to the US dollar, down 0.4p to £0.6717 against the euro, down ¥1.1 to ¥198.37 in relation to the yen, and down 1.1 centimes to SFr2.3044 against the Swiss franc.

The yen fell ¥0.3 to ¥110.65 in relation to the US dollar on data showing that in the week ending June 24, Japanese investors purchased ¥1,770 billion in foreign bonds, the largest weekly outflow since September of last year.

Elsewhere, currencies trading was slow ahead of an expected interest rate increase in the US as the Federal Reserve met on Thursday.

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