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25 April 2024

Sterling drops on political worries in UK

By Agencies

UK pound dropped for a sixth day versus the dollar amid concern British citizens will struggle to elect a government strong enough to reduce the country's debt.

Also the sterling was seen likely to stay weak after tumbling to a 10-month low on Monday. The pound slid to $1.4911 in London from $1.4991 in New York overnight when it dropped to $1.4784, the lowest level since May 1. It weakened to 90.79 pence per euro from 90.47. The UK currency weakened against all 16 of its most-active counterparts after polls showed Britain may have its first minority administration since 1974.

"A couple of new UK opinion polls are re-emphasising the political dynamic, which is a sterling negative," said Jeremy Stretch, a currency strategist at Rabobank International in London.

"Investors will prefer the safer haven of the dollar in this type of environment."

The UK currency on Monday had its biggest drop against the dollar since October 23, based on closing prices, as a poll showed the opposition Conservative Party holding the smallest lead over the Labour Party in more than two years.

Sterling has also been under pressure after Bank of England Governor Mervyn King said the central bank may still have to restart its asset-buying programme if the economic outlook worsens. The euro's outlook remained clouded by uncertainty over a bailout for Greece.


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