It’s more of the same for sterling, now trading at multi-month lows against most major currencies (the USD, EUR, JPY SEK, CAD CHF, AUD, NZD etc) on perceptions the pound will be allowed to weaken to help the fragile British economy.

We are seeing the lowest US dollar levels since early June (down six cents since last Wednesday); and lowest euro levels since March (down six cents this month).

Sterling is not helped by traders finding reason to buy into other major currencies. A surprise drop in US durable goods data on Friday boosted the US dollar’s safe-haven appeal. Meanwhile the euro looks well supported by political stability after Angela Merkel’s Christian Democrats and the Free Democrats, her preferred allies, won enough votes to form a government in Ger­many. 

But in the main nega­tive GBP sentiment has persisted since Bank of England Governor Mervyn King said last Thursday that sterling’s fall against major currencies was helping a much-needed rebalancing of the British economy towards exports. The outlook remains GBP negative.

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