Pound slides after report BOE's Weale favours immediate stimulus

[TOKYO] The pound dropped the most among developed- market currencies Tuesday after a report that Bank of England policy maker Martin Weale has begun to favor immediate stimulus for the UK economy.

Sterling extended what already was the biggest slide versus the dollar among 31 major currencies over the past month after the Financial Times reported that Mr Weale, an independent member of the Monetary Policy Committee, changed his mind on the timing of stimulus after purchasing managers' indexes released July 22 were a lot worse than he had thought.

"Weale has been hawkish for most of his tenure at the BOE, so his shift affected sterling," said Mansoor Mohi-uddin, a Singapore-based strategist at Royal Bank of Scotland Group Plc.

"The pound is set to stay under pressure as expectations build for next week's MPC meeting and the BOE inflation report."

The pound dropped 0.4 per cent to US$1.3089 as of 8:24 am in London. It reached as low as US$1.2798 on July 6, before rebounding to as high as US$1.3481 by the middle of the month.

Sterling touched the lowest since 1985 after Britain voted to leave the European Union last month. The BOE sets policy on Aug 4 after refraining from easing at the July meeting.

BLOOMBERG