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The pound is falling: Here’s why

The pound fell sharply in morning trading as the dollar reco..

The pound fell sharply in morning trading as the dollar recovered some of the strength it lost at the end of last week.

Having hit post-Brexit vote highs during trading last week, the pound was down 0.7 per cent against the dollar in mid-morning trading today, at $1.4065.

Sterling wasn't the only currency falling against the dollar: the euro was down 0.2 per cent, at $1.2401, while the yen was down 0.1 per cent at $0.0092.

Last week the pound rose as high as $1.43 on dollar weakness, after traders took comments by Steve Mnuchin to heart.

During a session at the World Economic Forum in Davos, the US Treasury secretary said a weak dollar was "good" for the US.

"The dollar remains the story here and the dollar index is currently hunkering down on the 89 handle having firmed a little in Asia overnight," said Neil Wilson, senior market analyst at ETX Capital.

"The conundrum of rising US yields and a falling dollar remains in place but with dollar shorts getting crowded traders should be wary of a squeeze."

Read more: Sterling has risen to yet another post-Brexit vote high

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