LONDON, Jan 26 Reuters Sterling fell to its lowest in a week against the dollar and traded near oneweek lows against the euro on Tuesday as more subdued risk sentiment across broader asset markets weighed on the currency.
Broader equity markets as measured by MSCIs All Country World Index and Wall Street futures were lower on Tuesday, giving the dollar a lift, while riskier currencies pulled back.
Expectations of a large U.S. fiscal stimulus package from U.S. President Joe Bidens administration has fuelled risk sentiment in markets in recent weeks, benefiting the pound, which has hit 212 year highs against a weakened dollar.
Sterling has also hit its highest against the euro since May 2020 last week, with analysts attributing the pounds gains to a slower COVID19 vaccine rollout in the European Union than in Britain.
But barring a jump in European stocks, a pullback in broader risk sentiment on Tuesday outweighed the lack of a negative surprise from UK labour market data and pushed the pound lower.
Data on Tuesday showed Britains unemployment rate hit its highest in nearly five years in the three months to November when coronavirus cases began to rise for a second time and most of the country returned to a partial lockdown.
Redundancies touched a record high, taking the unemployment rate to 5.0, its highest since mid2016, according to official data, although the increase was slightly weaker than economists forecasts.
By 0910 GMT, sterling was down 0.2 against the…