Pound slumps against euro as ECB plots more interest rate rises - live updates - THE TELGRAPH
The pound has dropped to its weakest against the euro since early 2021 as traders gear up for more interest rate rises by the European Central Bank.
Sterling shed 0.6pc against the euro to 87.18p, while the common currency also made strong gains against the dollar and yen.
The ECB last week raised interest rates by 75 basis points – the biggest increase on record – in an effort to tackle sky-high inflation.
Markets are now bracing for further monetary policy tightening after Joachim Nagel, president of the Bundesbank, signalled over the weekend that more rate rises were coming.
There was some respite for the battered pound as it rose 1pc against a weaker dollar to $1.17 – its highest in almost two weeks and up from a 37-year low.
But sentiment remains downbeat after new figures showed the economy grew just 0.2pc in July, a weaker rebound than expected from the extra bank holiday in the previous month.
Oil prices rise on weaker dollar
Oil has wiped out its earlier decline as a slump in the dollar offset mounting concerns about weaker global demand.
Benchmark Brent crude rose to almost $94 a barrel after earlier shedding as much as 1.8pc. Markets across Europe are largely higher this morning and the dollar fell as traders bet inflation is near its peak.
Still, there are persistent concerns that a slowing economy and efforts by central banks to tackle inflation will hurt demand for oil.
Prices have fallen by almost a third since June, shedding all the gains made since the invasion of Ukraine.
Rouble and Russian stocks rise as Kremlin eases rules
The rouble reversed early losses and Russian stocks pushed higher as the Kremlin eased some of the financial restrictions put in place following the invasion of Ukraine.
The Moscow Exchange resumed its early morning FX session for the first time since late February and non-resident "friendly" investors were allowed to return to stocks trading.
The dollar-denominated RTS index was up 1.6pc, while the rouble-based MOEX index was 1.3pc higher.
The rouble was 0.4pc stronger against the dollar at 60.33 but had lost 0.6pc to trade at 61.32 versus the stronger euro.