By TraderVox.com
Tradervox.com (Dublin) – The sterling pound fell against the euro to a two-week low after UK manufacturing index declined more than the market forecast in September. The sterling pound experienced a huge loss against most of its peers after Bank of England reported net household lending dropped to its lowest level in three years. Sterling losses were also supported by the increased confidence in the Spanish banking system according to stress-test result. The 17-nation currency has gained against the pound as Fitch Rating company indicated that the UK ratings outlook remained on the negative, stating that the government debt will peak at a higher level that earlier predicted in 2015-16 rather than 2014-15.
According to Audrey Childe-Freeman, a London-based Currency Strategist at Bank of Montreal, investors are now looking at domestic data from UK and this is dampening the demand for the UK currency. Despite the losses experienced yesterday, Audrey predicted that the sterling will increase to $1.65 by the end of the year against the dollar. The sterling dropped by 0.5 percent against the euro to trade at 79.93 pence per euro at the close of trading in London yesterday. It had earlier declined by 0.6 percent, registering its largest drop since September 14. The pound dropped by 0.1 percent against the dollar to trade at $1.6155.
The drop came after UK manufacturing index report by Markit Economics and Chartered Institute of Purchasing and Supply showed a decline to 48.4 in September from 49.6 registered in August. A Bank of England report showed that financial institutions in the country granted 47,665 mortgages from 47,557 in August. The net mortgage lending dropped by 276 million pounds, which is the largest drop since 2010. The pound also dropped as stress test result released on Sept 28 showed that the capital deficit for financial institutions in the country is at 59.3 billion Euros, which is less than the 62 billion Euros that was estimated.
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