Around 8:10 p.m. the British currency lost 1.48% to 1.2837 dollars and 1.04% against the euro at 84.03 pence.
The pound plunged on Friday and hit a year-and-a-half low against the dollar, after UK retail sales fell sharply as the dollar hit a new two-year high.
The pound lost 1.48% to 1.2837 dollars around 6:10 p.m. GMT and 1.04% against the euro at 84.03 pence, also suffering from the difficulties of British Prime Minister Boris Johnson, targeted by a parliamentary inquiry into the subject. holiday scandal during lockdown.
Retail sales fell 1.4% in March, marking an acceleration of the decline seen in February (-0.5%), although they remain slightly above their pre-pandemic level.
“This drop comes even before the upward revision of energy price caps in April,” said Derek Halpenny, analyst at MUFG, “suggesting that consumer spending will remain limited in the coming months.”
“Today’s numbers could affect the Bank of England’s monetary policy decision in May,” commented Michael Hewson, an analyst at CMC Markets, who noted that “the central bank faces an unenviable choice between high inflation and the risk created by rate hikes in the midst of a weakening economy”.
The reluctance of consumers who are starting to tighten their belts is reflected in a slowdown in activity in the United Kingdom.
Central bank divergences
Bank Governor Andrew Bailey said on Friday that the BoE remained on “the path of monetary tightening”, with three rate hikes already since the end of 2021, but reiterated that finding a balance between inflation and growth was “a path very narrow”.
Moreover, while the BoE would consider selling the British bonds it holds when its rate reaches 1%, it will not do so if “the markets are fragile,” said Mr. Bailey.
His caution contrasts with the determined tone adopted by Jerome Powell, head of the US Federal Reserve, who said the same day that a half-point rate hike was “on the table for the May meeting”.
These remarks boosted the greenback sending the Dollar Index, which compares the American currency to other major currencies, to a high since the end of March 2020 at 101.150 points.
The euro meanwhile yielded 0.42% to 1.0788 dollars, also penalized by the determination of Mr. Powell.
European Central Bank President Christine Lagarde, who said on Friday that there was a “strong possibility” of seeing rates rise in the eurozone by the end of the year, moderated the currency’s decline slightly. single European.
Currency traders will also be watching the result of the second round of the French presidential election on Sunday.
“The market is expecting a victory from Emmanuel Macron. If so, the euro could register gains, but the appetite for the dollar remains the engine of the market”, warns Ipek Ozkardeskaya, analyst at SwissQuote.