© Reuters. FILE PHOTO: Wads of British Pound Sterling banknotes are stacked in piles at the Money Service Austria company’s headquarters in Vienna, Austria, November 16, 2017. REUTERS/Leonhard Foeger/File photo
By Elizabeth Howcroft
LONDON (Reuters) – The pound fell to a one-month low against the dollar on Tuesday in what analysts said was the breaking of a technical level that did not change the bullish narrative on the British currency.
Sterling had held firm above $1.41 earlier in the session, showing no reaction to news that Britain was to delay its reopening from COVID-19 lockdown restrictions by a month because of the rapid spread of the more infectious Delta variant.
Currency markets were generally quiet before the U.S. Federal Reserve meeting, which ends on Wednesday.
But the pound slid gradually during the morning session, reaching as low as $1.4035 at 1149 GMT – its lowest in one month. By 1440 GMT, it had partially recovered and was at $1.40755, down 0.2% on the day.
Versus the euro, it was down 0.2% at 86.115 pence per euro.
Simon Harvey, FX analyst at Monex Europe, said the move did not stem from any particular news event but rather a breaching of the $1.4070 level to which it had come close in previous sessions.
“Sterling’s bearish bias has been in place over the past week or so as it toyed with breaking below 1.41 against the dollar,” he said.
“Today, momentum was on the side of the GBP bears as the pair smashed through the 1.4070 handle, triggering stops and pushing the currency down closer to its 50-day moving average, which rests at 1.4010.”
Still, he said that he was bullish on the pound as the delay in lifting remaining lockdown measures did not change the “structural backdrop” – expectation of an economic recovery.
Sterling rallied at the start of the year, boosted by Britain’s early start to its COVID-19 vaccine roll-out. In May, it reached a three-year high of $1.425.
“We’ve really run out of that upward momentum we’ve had on the back of the vaccine story,” said Kit Juckes, head of FX strategy at Societe Generale (PA:).
Juckes also said he was bullish on the pound versus the dollar, but that it would take substantial news to push the pair significantly higher.
Jobs data released earlier in the session showed the number of employees on British company payrolls surged by a record amount in May as pandemic restrictions eased.
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