Investing.com – The pound showed weakness against major currency counterparts on Tuesday amidst a slew of news that negatively affected sentiment and convinced investors to undo positions ahead of the Bank of England (BOE) and Federal Reserve (Fed) monetary policy decisions.
Early on Tuesday, an OBR poll showed that a majority of Britons that intended to vote in the June 23 referendum on European Union (EU) membership would prefer to leave the group. The so-called Brexit worries businesses about the implied effect on trade with Europe and the possible hit to the U.K. economy which some experts fear could increase the chances for a recession.
With regard to the British economy, economists cut the growth forecast for this year to 2%, from 2.2%, according to a Bloomberg survey published on Tuesday.
Also weighing on the pound, the same survey showed that the chances for the BoE to lower interest rates in 2016 had grown to 23%, up from the February survey that had placed the odds at only 10%.
Expert opinion also weighed in against sterling on Tuesday as Goldman Sachs (NYSE:GS) recommended taking long positions in the dollar ahead of the Fed meeting on Wednesday on the possibility of the U.S. central bank sounding more hawkish than expected and suggested that shorting cable offered the best risk-reward ratio ahead of the BoE meeting on Thursday.
In this light, the pound traded lower against major currency rivals with GBP/USD dropping 0.87% to 1.4176 at 12:59GMT or 8:59AM ET, GBP/JPY falling 1.81% to 159.83 and EUR/GBP trading up 0.95% to 0.7893.