In These New Times

Sterling falls after weaker-than-expected UK CBI Reuters
Tue Oct 21, 2008 11:20am BST
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LONDON, Oct 21 (Reuters) – Sterling fell on Tuesday, hitting a session low against the euro after figures showed that UK manufacturers were the most grim on their business outlook in nearly 30 years, underlining ongoing economic weakness.

The Confederation of British Industry’s quarterly business situation balance registered -60 in October versus -40 in July, the lowest since July 1980 [nLL90190].

“The survey highlights the fact that not only are conditions excessively bad at this stage, but they are set to get even worse and will add to the gloom-and-doom picture dominating in the UK,” Brown Brothers Harriman senior FX strategist Audrey Childe-Freeman said.

“It’s all fundamentally negative for sterling, the question is how much bad news is priced in already.”

The euro climbed to 77.82 pence, recovering from early losses to trade at a session high.

The pound traded around $1.7020 shortly after the data was announced, falling from $1.7069 beforehand and heading towards a one-week low hit earlier in the day.

(Reporting by Veronica Brown and Naomi Tajitsu)