The pound is heading for its biggest six-month decline against the US dollar since 2016, the year of the Brexit referendum.
Sterling fell 0.46% to $ 1.2127 by mid-afternoon on Wednesday, its lowest level since June 16, when the Bank of England raised its key interest rate by 25 basis points to 1.25%.
The pound fell more than 10 percent against the dollar this year, hampered by fears of a major economic slowdown, rising inflation and growing uncertainty about the effects of Brexit.
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Also Wednesday, Swati Dhingra, who will become Bank of England politicians in August, said there was room for a gradual approach to raising interest rates.
The bank has raised interest rates five times since December, mostly by a quarter point each time, in a bid to fight inflation.
But inflation peaked at a 40-year high of 9.1 percent in May, and some of the bank’s politicians say interest rates should have risen.
Ms Dhingra, an associate professor at the London School of Economics, will succeed one of these politicians.
Speaking to a parliamentary committee examining her appointment, she said she may have supported a half-point increase at the meeting this month, but now believes it would be a mistake.
She said: “Looking back, I think there may be room for a very gradual approach here.
“Newer data is beginning to show that the delay has probably become much more inevitable than previously thought.”
City Index analyst Fawad Razakzada told Reuters: “The pound continues to sell as worries about the sharp slowdown in the economy outweigh the risks of powerless inflation.
“This has raised expectations that the BoE will increase the speed of loading before stopping and potentially reversing the increase in interest rates.”
He said Ms Dhingra “has gone a step further, saying the central bank will have to tighten its belt very gradually forward”.
“The economy is starting to slow down”
Bank of England Governor Andrew Bailey, meanwhile, said it was “very clear” that the economy was beginning to slow, adding that the bank did not have to act “forcibly” to control inflation.
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He said at an event of the European Central Bank in Portugal: “There will be circumstances in which we will have to do more.
“We are not there yet for the next meeting.
“We still have a month left, but this is on the table.
“But you should not accept that this is the only thing on the table, this is the key moment,” he added.
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