STERLING has notched up its longest losing streak against the US dollar since the autumn of 2008, as financial market expectations of a rise in interest rates this year diminish.
The pound was trading at around $1.6574 at 5pm yesterday, down from its Thursday close of $1.6589, having hit a fresh four-month low of $1.6559 during the session.
According to Reuters data, the pound has now declined against the greenback over seven consecutive weeks and this is sterling's longest fall against the greenback since September 2008. The pound had surged through the $1.70 mark on June 16 for the first time since August 2009 and gone through $1.71 later that month.
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Sterling had enjoyed some respite on Monday, after Bank of England Governor Mark Carney was quoted in a Sunday newspaper as saying the Monetary Policy Committee would not have to wait for a return to growth in real wages before raising UK base rates from their record low of 0.5 per cent.
However, figures from the Office for National Statistics on Tuesday showed annual UK consumer prices index inflation had fallen from 1.9 per cent in June to 1.6 per cent in July. This unexpectedly steep drop in inflation pushed sterling to new four-month lows on Tuesday because it was viewed as easing the pressure on the MPC to raise base rates, which have been at 0.5 per cent since March 2009.
The revelation on Wednesday that MPC members Martin Weale and Ian McCafferty had voted for a quarter-point rise in rates earlier this month, albeit unsuccessfully, has failed to stop a growing view in financial markets that the committee is likely to hold off from raising benchmark borrowing costs until 2015.
Mr Weale and Mr McCafferty, regarded as hawkish, were outvoted by the other seven members of the MPC at the end of the August 6 and 7 meeting.
At this meeting, MPC members were unaware of the fall in annual inflation in July.