UK economy fears spark two-month low for sterling

Sterling has hit a two month low against the dollar as tension grows about the release of key UK economic data.

GDP figures, minutes from the Bank of England’s Monetary Policy Committee, unemployment and lending data are all due to be released this week.

Fourth quarter GDP data is particularly important, as economists and policymakers wait to see if the UK slipped back into negative growth at the end of last year.

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Andy Scott, premier account manager at foreign currency exchange brokers HiFX believes sterling will remain weak for the foreseeable future.

“With the government here struggling to meet their deficit reduction target and the economy failing to maintain any growth, the economic situation remains a huge concern and this is manifesting itself in a weaker pound,” he said.

“With the potential for credit ratings downgrades and more quantitative easing from the Bank of England with the economy faltering, it’s unlikely there will be a resurgence of buying interest in the pound any time soon.”