Sterling weakens against the dollar but firms slightly against the euro ahead of Burnham speech

Sterling Slips Against Dollar, Holds Firm Against Euro Before Burnham Speech

Market Movements and Political Context

LONDON, Sept 29 (Reuters) - The pound fell against the dollar on Tuesday, caught up in the global trend, but strengthened marginally against the euro as traders awaited a speech by British Prime Minister Andy Burnham at his governing Labour Party's annual conference. 

Dollar Strength and Sterling Performance

The big picture in currency markets is one of a steadily strengthening dollar, and sterling was not immune. The pound lost 0.2% to $1.3226, close to a three-month low, as elevated US bond yields and oil prices combined to boost the dollar. 

Sterling vs. Euro

But the pound did manage to strengthen against the euro for a third day, with the common currency last down 0.1% at 85.72 pence. 

Anticipation of Burnham's Speech

Burnham will speak later in the day and offer ​an "honest conversation" with Britain to spell out the trade-offs in tackling some of the nation's deepest problems, such as social care and the ‌control of utilities, in his first conference speech as prime minister.

Potential Market Impact

The speech may not have a dramatic effect on markets, but finance minister John Healey on Monday managed to elicit a small positive reaction for the pound and helped British government bonds, known as gilts, avoid the worst of the global selling. 

Analyst Commentary

Societe Generale analyst Kenneth Broux said the pound and gilts had outperformed peers on Monday after Healey’s pledge for fiscal responsibility. 

"But it will take more convincing for gilts that the government is serious about stabilising spending. PM Burnham faces a tricky balancing act," Broux added. 

Additional Economic Data

Also in the background for the pound was Bank of England data showing that unsecured lending to British households in August rose at the fastest annual pace since at least 1993.

(Reporting by Alun JohnEditing by David Goodman)