The pound fell to its lowest in more than two years against a broadly strong US dollar on Monday, pressured by data showing factory inflation may have peaked and a US decision to take control of mortgage agencies Fannie Mae and Freddie Mac.
Analysts said the data gave the Bank of England room to cut rates as it needs to see a marked cooling in inflation before it can start easing monetary policy. The US Treasury’s decision, meanwhile, is expected to boost investor confidence in the US financial sector and broader economy, thereby supporting the dollar.
In early afternoon trading, sterling fell to $1.7472, the lowest since April 2006, according to Reuters data, and down more than 1.0% on the day. (Reuters)