UK Pound Sterling Stumbles

The British Pound Sterling declined due to apprehensions of economic slowdown as the United Kingdom appeared to be heading towards depression. The currency touched a three-week low versus the common currency and scaled down by more than one percent. Market traders were also cautious about the forthcoming general elections. The pound touched a three-week slump versus the euro (€1.3664). Meanwhile, the dollar dropped to under $1.48 which is near a five-year low of $1.46 after the release of minutes by the Bank of England Monetary Policy Committee.

The decrease of the pound follows a weak industrial trends report by the Confederation of British Industry. CBI data disclosed orders for exports this month went down to their lowest level in over two years. Total orders for book balance decreased to zero this month compared to +10 last month.

Investors are also looking at the most recent inflation data from the UK which the Office of National Statistics will publish tomorrow.

Those are expected to show consumer price inflation has dropped to almost zero thanks to shrinking food prices and a drop in the oil price back to $56 a barrel.

The CBI poll for this month indicates UK manufacturers are being restrained by dismal export orders. Export orders balance dropped sharply to a 26-month slump of -26 percent in March from -8 per cent during the previous month. According to Howard Archer, head economist of IHS Global, the survey is unacceptable though the weakness is focused on export demand.