News Column

Dollar Falls Further Versus Sterling, Hits New 5-year Lows

June 30, 2014

WASHINGTON (Alliance News) - The dollar hit new 5-year lows against the sterling and weakened versus other major rivals on Monday, still stung by last week's dismal first quarter US GDP reading.

Traders are conflicted about what the huge 2.8% contraction in the US economy means for monetary policy moving forward.

Federal Reserve officials have said they expect the recovery to get back on track as the year progresses, but the extent of the past winter's woes could push back the time frame for the first rate hike well into 2015.

The buck slipped to USD1.71 versus the sterling for the first time since 2009, even as data showed the UK housing market cooled.

UK lenders approved the lowest number of mortgages for 11 months in May, as the Bank of England tightened lending rules.

The dollar failed to rally versus the euro despite another tame euro zone inflation reading. The pair held at USD1.3661 for most of the day.

Euro zone inflation remained stable at 0.5% in June, flash estimate from Eurostat showed.

It was forecast to rise slightly to 0.6%. Inflation has been below the European Central Bank's target of 'below, but close to 2%' for the seventeenth consecutive month.

Meawhile, German retail sales fell unexpectedly in May from the prior month.

Official data from Destatis revealed that retail sales were down 0.6% month-on-month in May.

The dollar was steady at Y101.30 versus the yen, having moved down about one % last week.

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Source: Alliance News

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