Pound slips below $1.26 as risk appetite wanes

FILE PHOTO: UK pound coins plunge into water in this illustration picture, October 26, 2017. Picture taken October 26, 2017. REUTERS/Dado Ruvic/Illustration

LONDON - The British pound slipped on Thursday as risk aversion swept through markets, boosting the safe-haven appeal of the U.S. dollar as upbeat Chinese growth data failed to lift sentiment.

Against the dollar, the pound slipped a quarter of a percent to $1.2556, even though data showed the slide in Britain’s jobs market eased in June.

“We still believe going forward the UK faces issues and think the economy will fare worse than others in Europe,” said Rony Nehme, chief market analyst at financial research firm Squared Financial.

The number of employees on company payrolls fell by 649,000 from March to June, but the largest declines came at the start of the lockdown, the Office for National Statistics said on Thursday. The people on payrolls fell by over 74,400 in June, compared with April’s 450,000 and May’s 124,000.

With British gross domestic product data for May rising less than expected, investors are questioning whether the fiscal stimulus measures already announced will be enough to prop up the economy.

Speculators are shorting the pound. The latest CFTC positioning data showed that leveraged funds held $1.28 billion in shorts, though the amount had declined in recent weeks and was not as high as around the same time last year.

The pound also weakened against the euro, falling 0.2% to 90.84 pence before a European Central Bank meeting later on Thursday.

Although second-quarter Chinese GDP data rebounded by 3.2%, weak consumption data showed the recovery was uneven, casting a shadow over global markets.

Reporting by Saikat Chatterjee; editing by Larry King