Sterling falls to a more than one-week low versus euro

div classBodysc17zpet90 cdBBJodivpBy Samuel Indykp

pLONDON Reuters – Britain‘s pound fell to a more than oneweek low against a strengthening euro on Tuesday but was little changed against the U.S. dollar ahead of data that could provide a clearer picture of the UK’s growth outlook. pdivdivdiv classBodysc17zpet90 cdBBJodiv

pAt 0753 GMT, the pound was down 0.3 against the euro to 85.24 pence, its weakest level against the single currency since May 16. p

p“The bounce in EURGBP owes to the broad move higher in the euro on the back of comments in the past two days from the ECBs Lagarde on the nearterm prospect of rate hikes,” said Jens Naervig Pedersen, Danske Bank chief analyst, FX and rates strategy. p

pEuropean Central Bank chief Lagarde said on Tuesday she saw the ECBs deposit rate at zero or “slightly above” by the end of September, implying an increase of at least 50 basis points from its current level.p

pThe Bank of England has already raised interest rates four times since December, more than any other major central bank, but slowing growth and the costofliving crisis have prompted some analysts to scale back their expectations for future increases. p

p“We could see EURGBP rise to around 0.86 shortterm, as relative monetary policy will continue to favour the euro,” Pedersen added.p

pSterling was broadly flat against the dollar at 1.2590.p

pFlash estimates for the May manufacturing and services purchasing managers indexes are scheduled to be released at 0830 GMT, which could give a clearer view on how the economy is faring. p

p“The May readings will again be impacted by the Ukrainian crisis and by Covid restrictions in China but, overall, we expect another set of solid outturns,” analysts at Lloyds Bank said in an research note. p

pMeanwhile, British public borrowing in the 202122 financial year fell to 144.6 billion pounds or 6.1 of GDP, figures from Britains Office for National Statistics showed on Tuesday, down more than 7 billion pounds from an initial ONS estimate last month. p

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pp Reporting by Samuel Indyk Editing by Kirsten Donovanp

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