Sterling puts up poor show in foreign exchange markets

Sterling is continuing to put up a poor performance on the foreign exchange markets.

Analysts have suggested that unexpectedly low manufacturing data could be to blame for the currency's meagre show.

The Office for National Statistics yesterday (March 10th) released figures showing that the UK's trade deficit grew by £1 billion in January to reach a total of £8 billion.

Coupled with fears of a hung parliament, the trade deficit weight heavily on the pound as doubts arose concerning the state of the UK economy.

However, Jeremy Stretch, a strategist from Rabobank, told Reuters that it was not all bad news for the pound.

Mr Stretch said that the "reiteration" of comments made by the Bank of England policymaker Adam Posen served to remind traders that sterling's weakness does not necessarily mean that markets have "lost confidence in Britain's inflation outlook".

Sterling fell to a low of $1.48 yesterday at 11:00 GMT with a similarly weak result against the euro.

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Posted by Chris Barber