Pound falls to 7-week LOW against dollar as US gets set to raise interest rates
THE pound has tumbled to a fresh seven-week low against the dollar and six-week low against the euro, amid growing expectations US fed fund rates will soon be hiked.
Pound falls as Scotland calls for new independence referendum
Sterling dropped 0.3 per cent against the American currency to an exchange rate of $1.2155, as experts forecast it could reach as low as $1.18 - a level not seen since last year's flash crash.
The dollar has been given a huge boost by Donald Trump's spending plans and tax cuts, as well as expectations interest rates in the US will be hiked again this month.
There is now a 98 per cent chance of the Federal Reserve raising rates in March - and a 41 per cent chance of another hike in June, according to markets.
Against the euro, the pound edged down to €1.152.
The pound has tumbled against the dollar and euro
The pound is at a 7-week low against the dollar
The pound is at 6-week low against the euro
Sterling has also been knocked by reports that Nicola Sturgeon is set to demand a second Scottish independence referendum.
Disappointing economic indicators have also weighed on the pound after service sector output dropped to a five-month low.
Markets are now focused on Philip Hammond's 2017 Budget.
The Chancellor is expected to give a cautious update on the Britain's finances and is predicted to only make a few major changes, ahead of Article 50 being trigged.
Experts said
Dollar to remain strong says strategist
Kathleen Brooks, research director at City Index Direct, said: "We believe that the biggest impact from this Spring Budget could be the contrasting fiscal stances of the UK and US governments, which may weigh heavily on sterling if the market continues to buy up every dollar in sight ahead of the Fed meeting on 15th March.
"While there are unlikely to be any extravagant moves in this Budget, if the UK can manage its EU exit negotiations and the economy can still defy expectations, then Hammond may be able to pull a few rabbits out of his hat, but traders will have to wait until the autumn."