FX round-up: Pound hits fresh 31-year low despite BoE optimism

Selling pressure on the pound carried over from the previous session and with a dash of 'hawkish' Fedspeak offsetting somewhat positive data on the economic front.

As of 2020 BST cable was down by 0.78% to 1.2740, having hit an intraday low of 1.2719 - marking a fresh 31-year low.

To take note of in that regard, monthly price charts for the currency pair appeared to be pointing towards a gradual descent for the pair as the most likely end-game.

Sterling was also lower versus the single currency, losing 0.72% to 1.1373, albeit higher against the Japanese unit, by 0.26% to 130.87 in the case of the latter.

That was despite the largely upbeat tone struck in a speech by the Monetary Policy Committee's newest member, Michael Saunders.

Earlier in the day, Markit's construction sector PMI for the month of September rose from 49.2 to 52.3, defying expectations for a dip to 49.0.

Saunders said he believed the equilibrium rate of unemployment in the UK was lower than the MPC had estimated and he expected Britain's economy would not slow "as much over the next year or two as implied by the MPC’s central forecast published in August".

Somewhat ironically perhaps, the rate-setter said that one of the risks to the growth outlook after Brexit was the possibility of EU nationals working in the UK deciding to leave.

Acting as a backdrop, in its latest World Economic Outlook the International Monetary Fund trimmed its forecast for the rate of growth in Britain's gross domestic product in 2017 by two tenths of a percentage point to 1.1%.

Just as significantly, the Washington-based lender now expected the US economy to expand by 2.2% in 2017, three tenths of a percentage point less than it estimated back in July.

Emerging market economies on the other hand were still seen accelerating to a 4.6% clip next year, the same as the IMF had projected as far back as April.

Growth prospects for Brazil and Russia in 2017 were revised higher by the most and those for the People's Republic of China unchanged.

Meanwhile, the US dollar index was higher by 0.45% to 96.129 after the president of the Richmond Fed, Jeffrey Lacker, weighed in with some hawkish remarks.

Those gains knocked commodity currencies lower against the Greenback, with the Aussie retreating 0.63% to 0.7624 and the Kiwi off by 0.83% to 0.7213.

Lacker's defense of pre-emptive interest rate hikes were likely music in the ears of Japanese policymakers, as dollar/yen jumped 1.18% to 102.84.