LONDON, July 12 (Reuters) – The pound edged higher on Friday but was set for a record 10th week of consecutive losses against the euro as weak data and the growing possibility of interest rate cuts after a chaotic Brexit kept investors sidelined.
Hopes the Bank of England will raise rates have been one of the few supports for the pound in recent weeks, as the Federal Reserve, the European Central Bank and other central banks turned dovish. Recent dismal data have dashed those hopes.
At the same time, concern has grown about a no-deal Brexit. The favourite to be next prime minister, Boris Johnson, sees that Oct. 31 deadline as set in stone, regardless of whether Britain reaches an agreement with the European Union on the terms of its departure.
At a Thomson Reuters event on Friday, senior Bank of England official Gertjan Vlieghe said the central bank might need to cut rates almost to zero in the event of a no-deal Brexit, and it was not clear how long it would take for them to rise again.
As a result, the pound has struggled this week against other currencies, notably the dollar and the euro.
Versus the euro, the pound was flat at 89.81 pence, but was still on track for a record 10th consecutive week of losses.
Against the dollar, the pound edged 0.1% higher at $1.2539.
But some market watchers are turning optimistic towards the pound after its recent drop.
“Current levels make sterling the second-cheapest G10 currency after the yen from a valuation perspective. We think this weakness is overdone and sterling is due for a rebound,” UBS strategists said in a note.
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