Sterling weakens on poor US non-farms

Sterling weakened by 0.86 cents (0.52%) against the US dollar yesterday, finishing the day at $1.6392.

• In early trading yesterday, sterling weakened against the dollar as traders were unwilling to take on large positions ahead of important US jobless data out at lunchtime. When the announcement came, sterling plummeted after it showed a larger-than-expected drop in US non-farm payrolls in June.
  
• The pound was already in negative territory before the data, however, following cautionary comments from Bank of England policymaker Tim Besley and worse-than-expected UK construction PMI figures. Besley said it was too early to say when the central bank would be able to withdraw the massive stimulus it has supplied to the British economy, whilst the latest construction data showed a further deepening in the contraction of the sector.
  
• Weak London equities and a fall in oil prices also hurt the UK currency yesterday. The FTSE 100 eventually finished the day down 106.44 (2.45%).
  
• In trading so far today, the pound has recovered some of yesterday’s losses despite a warning from the WHO that swine flu is now ‘unstoppable’.
  
• There are no major announcements due in the US today, whilst in the UK Services PMI data is out at 13.30 BST.