FX round-up: Sterling sours on major crosses, dives versus kiwi, rand

Sterling soured on its major cross this afternoon, in particular crumbling against a resurgent New Zealand dollar and stronger South African rand.

At about 17:09 BST, sterling was down 0.06% to $1.2184, and down 0.27% to €1.1079. Against the kiwi it fell 0.74% to NZ$1.7081, and on the South African unit it fell 1.27% to 17.2501 rand.

The British unit has been on the back foot since the UK's non-binding referendum to quit the EU back in late June, the market now preoccupied with a so-called hard Brexit, inflation and the fallout for the UK economy.

SpreadEx financial analyst Connor Campbell observed that sterling's "manageable morning got slightly worse this afternoon."

It had fallen below the key $1.22 and €1.11 levels it has been dancing around recently, said Campbell, noting sterling remained above recent multi-year nadirs.

FXTM research analyst Lukman Otunuga opined that the "poisonous combination of uncertainty and political risk have made the sterling the worst performer this year among its major peers with further declines still expected.

"While the parity dream on the GBPUSD is still some distance away, a US rate hike in December could be the trigger which opens a path to fresh 31-year lows below $1.180," Otunuga said.

Sterling was also down again the aussie, loonie and yen, experiencing much the same fate as the greenback on those crosses and the euro.

IG's chief market analyst Chris Beauchamp noted the British pound's weakness was prior to a raft of UK figures, starting with the consumer-price index on Tuesday.

"By and large the pound has held its ground today, but this is due in no small way to weakness in the dollar driven by (Fed Reserve chair) Janet Yellen’s speech at the end of last week."

Yellen said on Friday that policymakers needed to mull the potential for a "high pressure economy" and let inflation continue to rise.

Meantime, the dollar fell 0.6% to NZ$1.4024 and eased 1.1% to 14.1602 rand. The dollar-spot index was down 0.13% to $97.893.

Support for South African Finance Minister Pravin Gordhan aided the rand, amid lingering concerns about the political situation in South Africa. The kiwi dollar was resurgent ahead of New Zealand inflation and dairy prices data due Tuesday.

Returning to sterling, think-tank EY Item Club said Britain faces a prolonged period of weaker growth as consumer spending slowed and businesses curbed investments.

It expected inflation would rise due to a weaker pound post-Brexit, which might prompt consumers to refrain from spending.

Elsewhere, Eurozone inflation was confirmed at 0.4% for September, up from 0.2% in August and in line with expectations.

In the US, the Fed Reserve revealed that industrial production rose 0.1% in September, versus consensus for 0.2%, after falling a revised 0.5% in August.

In contrast, the Empire State manufacturing index fell to -6.8 in October from -2 in September, which was below the consensus +1.

The new orders index edged up but remained negative at -5.6, suggesting an ongoing fall in orders, and the shipments index rose to -0.6.