Sterling falls to five-year low of more than 88p against euro

The euro soared to a five-year peak of more than 88p against a struggling sterling on Wednesday, putting fresh pressure on exporters and the tourist sector. The euro rose as high as 88.43p sterling this morning.

As well as sterling selling, the euro also gained ground after a Bloomberg article cited sources as saying the ECB would probably wind down its bond-buying gradually before ending quantitative easing.

However, an ECB media officer said in tweet that the ECB had not discussed reducing the pace of its monthly bond-buying.

Nevertheless, this sent bond interest rates higher and benefited the euro.The euro was also 0.2 per cent higher against the dollar at $1.1226. A strengthening of the euro against other currencies will be unwelcome to Irish exporters.

Meanwhile, sterling fell below $1.27 for the first time in more than three decades amid worries that Britain’s separation from the European Union could be rocky and have adverse economic consequences. Talk of a hard Brexit has led to significant selling of sterling in the last few days.

Dollar slips

The euro’s rise saw the dollar retreat from near a two-month high against a basket of currencies. The greenback had been on a strong footing after rallying at the start of the week on an upbeat survey of the US manufacturing sector.

It got an additional lift after Richmond Federal Reserve president Jeffrey Lacker said on Tuesday there was a strong case for raising interest rates, as treasury yields rose to two-week highs in response to a surge by their euro-zone counterparts.

The dollar index was down 0.15 per cent at 96.038, having risen to 96.442 on Tuesday, its highest since August 9th. It was slightly lower at 102.77 yen after rising to a three-week high of 102.965 on Tuesday, when it posted its sixth straight day of gains against the Japanese currency.