The UK currency was blocked around 1.6325 against the dollar in Europe on Monday and weakened sharply with lows just below 1.61 as US markets opened. Sterling also weakened to beyond 0.8630 against the Euro with sharp losses against the yen.
Sterling was undermined by further speculation that the Bank of England would increase the size of its quantitative easing gilt purchases at the policy meeting this week. There were also continuing fears over the debt outlook as the government looked to curb spending levels.
The UK currency was also unsettled by the wider deterioration in risk appetite. Confidence was underpinned later in the US session by a recovery in global stock markets and Sterling pushed back to 1.6250 later on Monday. Choppy trading is liable to continue with Sterling finding support beyond the 0.86 level against the Euro.
Agree, GBP is slowing
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