Pound falls below $1.23 after disappointing economic data

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Sterling has weakened to its lowest level against the dollar in almost six weeks after a series of disappointing economic releases exacerbated the impact of the dollar’s rally on Wednesday.

The pound’s slump comes after William Dudley, head of the New York Federal Reserve, said the prospects for an interest rate rise in the US had become “a lot more compelling”. Futures markets are now pricing in an 80 per cent chance that the Fed will raise rates later this month.

The dollar index, which tracks the greenback against a basket of peers, rose to its highest level in more than six weeks earlier this morning, but the pound took a particularly bad hit after a closely-watched survey on the country’s manufacturing sector suggested growth slowed in February, while data from the Bank of England showed a second consecutive month of declines in overseas investors’ gilt holdings.

The pound touched a low of $1.2295 around midday, and at publication time was down 0.6 per cent for the day to $1.2309, its lowest level since January 20.

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