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Pound ends biggest 2-week drop since 2009 as UK flags stimulus
[SYDNEY] The pound halted its biggest two-week drop in more than seven years on Monday after UK authorities flagged measures to prop up the economy as the country prepares to leave the European Union.
Sterling rose against the US dollar for the first time in three sessions after Chancellor of the exchequer George Osborne floated a lower corporate tax rate, and before Bank of England governor Mark Carney outlines the available macroprudential toolson Tuesday. Chart patterns suggest the UK currency is near oversold levels, following its plunge to the lowest level in more than three decades last week.
"The latest measures announced to stimulate the UK economy - lower corporate taxes and BOE macroprudential easing - should be viewed by the market as positive and may help the pound partly rebound in the near term," said Imre Speizer, a market strategist at Westpac Banking Corp in Auckland.
"But ultimately, a lower pound will be required to help rebalance the UK economy."
The pound climbed 0.2 per cent to US$1.3287 at 1:23pm in Tokyo, following a two-week, 7.6 per cent slide. It was the worst performer in June among 31 major currencies tracked by Bloomberg.
Sterling's 14-day relative-strength index was at 31.7, near the 30 level below which some traders say the currency is oversold and poised to reverse direction.
Australia's dollar dropped 0.1 per cent to 74.88 US cents after an election Saturday left neither of the major parties with enough seats to form a government in their own right, potentially increasing risks to the country's top AAA credit rating.
The yen weakened 0.2 per cent to 102.73 per US dollar, while the euro was little changed at US$1.1138.