Sterling's dollar ignominy in 2016

Sterling has pipped the pesos of economically challenged Argentina and Mexico to achieve the unwelcome ignominy of being the worst-performing currency against the dollar so far in 2016.

China's renminbi, India's rupee and Poland's zloty also outperformed the pound against the dollar between the start of the year and today.

Even Turkey's lira performed better against the greenback, as did the pesos of Chile and Colombia, and the real of Brazil along with the ruble of Russia.

Sterling has been on a marked downward bent since the UK indulged in a non-binding referendum that returned in favour of quitting the European Union.

Since 1 January, sterling has fallen 12.4% against the greenback. A brief spike higher prior to the 23 June referendum meant it had fallen 13.2% between that date and 13:32 BST today.

A survey by Bloomberg of 31 major currencies versus the dollar revealed sterling was bottom of the pack, with commodity-backed and safe-have issues making heady positive gains on the US unit.

The UK remains in political turmoil after the market was shocked as the country narrowly and divisively voted to quit the EU.

The two leading political parties -- the Conservatives and Labour -- have been thrown into chaos following the ballot, and a successor has yet to be appointed to replace outgoing Prime Minister David Cameron.

At 13:32 BST, sterling was up 0.09% to $1.2920. This flaccid rally comes amid an increasingly pessimistic outlook for Britain's currency.

All eyes are now on Bank of England's rates call next week, with the market increasingly expecting the central bank's Monetary Policy Committee to loosen on Thursday next week.

"We have pencilled in a 0.25% rate cut in July, though we would not rule out a bigger move," said Capital Economics, adding such a loosening might be chased by an expansion of quantitative easing.

"After all, other central banks' experience may have re-assured the MPC that rates can fall to zero or below without causing substantial damage to the banking sector."

Others pundits, such as Sandy Chen of Cenkos Securities, were cautious, especially when it came to the potential for easing the key rate by 0.5%.

"Please don't," pleaded Chen.

"A 50 basis point cut won't boost borrowing, but it will almost certainly lead to another drop in cable," he said, suggesting BoE standing pat instead.

"If a floor in the GBP exchange rate could be established, this crucial bit of relative certainty could begin to calm down the rest of the markets."

Other market watchers characterised sterling's turns today as a breather, doubting the cable would travel for long on a straight line.

"It is our view," wrote Rabobank, "that this may be more favoured than a (interest) rate cut at least as an immediate policy response to the Brexit vote.

"We maintain our forecast of GBP/USD1.26 on a one-month view."