Stumbling sterling heads for first three-day fall of year

[LONDON] Britain's pound fell on Monday, setting it on course for its first three-day fall against the US dollar of the year and putting it on the back foot ahead of Thursday's first Bank of England meeting of 2017.

The BoE is widely expected to revise up its short-term growth and inflation forecasts following reassuring recent UK data, but the uncertainty surrounding soon-to-start Brexit negotiations is expected to keep it cautious.

Sterling was quickly down 0.3 per cent against the US dollar at US$1.2510 in London, having slipped off a five-week high at the end of last week.

It dipped similar amounts against its other major FX peers, with the euro worth 85.39 pence and the pound fetching 143.64 yen, in what was its first fall against the safe-haven Japanese currency in five sessions.

Crédit Agricole FX Strategist Manuel Oliveri said his team expected sterling to struggle following a recent mini-rally, with Brexit uncertainty to remain the main driver and data also likely to weaken.

"We don't think the (BoE) inflation report will be a big shock," he said.

"It may sound a bit more hawkish but it still remains cautious."

"A lot more is needed to push the needle" for the bank to start considering a move in interest rates, he added.

The pound has fallen roughly 19 per cent against the US dollar since June's Brexit vote, but for the last few months it has been in a relatively restrained range of between US$1.20 and US$1.28 and 84 pence and 88 pence per euro.

For companies it continues to have mixed effects.

Denmark's Novo Nordisk, the world's top maker of diabetes drugs, said on Monday it would invest £115 million (S$206.798 million) in a new British research centre.

UK airline Flybe said, however, that uncertain consumer confidence had contributed to a poor start to its year.

REUTERS