The pound fell sharply in early trading against the dollar exacerbating falls seen at the end of last week, as renewed concerns about the state of the global economy caused investors to jettison riskier assets.
Sterling has declined rapidly in the past week, from a high of $1.6744 on 30 June to close at $1.6345 on Friday. This morning it fell further still, down almost two cents at one stage to hit a month low of $1.6095, before rising slightly to trade at around $1.6120 by noon.
While sterling has enjoyed a dramatic recovery from lows seen at the start of the year, the moves have been more mixed since the start of June as nervous investors seek out safe havens as the recovery shows signs of stalling.
Last week, fears that the UK and other economies were not out of the woods yet were intensified after the Office of National Statistics announced that UK Gross Domestic Product (GDP) fell by 2.4% in the first quarter, much worse than previously feared. Jobs news in the US, where unemployment jumped much more than expected, also weighed on recovery hopes.
Glenn Uniacke, senior dealer at foreign exchange business Moneycorp.com, said the UK GDP revision hurt recovery hopes, as had US payroll figures which were nowhere near as positive as expected.
He said: 'The recovery trend was always on thin ice, and also this week the Monetary Policy Committee is potentially going to expand Quantitative Easing (QE).
While the MPC is unlikely to change interest rates, it is expected to expand its quantitative easing programme from £125 billion to £150 billion or more.
'That is weighing as the likelihood of expanding QE is quite high,' said Uniacke
