The pound wiped out its early gains against most major rivals in European deals on Thursday, after the Bank of England decided to maintain its key interest rate unchanged at a record low and indicated that inflation is expected to remain below 1 percent until spring 2016.
At the meeting, the Monetary Policy Committee voted 8-1 to hold interest rate at 0.50 percent as seen in August and September, the bank said in a statement.
Policymakers voted unanimously to maintain quantitative easing at GBP 375 billion.
All members agreed that the likely persistence of the headwinds restraining economic growth following the financial crisis means that, when Bank Rate does begin to rise, it is expected to do so more gradually and to a lower level than in recent cycles.
The committee noted that the near-term outlook for inflation was weaker than at the time of the August Inflation Report, in part reflecting the further decline in the oil price.
The inflation would remain around zero before picking up around the turn of the year, the minutes showed. “Nevertheless, it was likely that the inflation rate would remain below 1% until the spring.”
The pound was firmer on Wednesday, as U.K. industrial output rebounded at a faster than expected pace in August and a sharp rebound in oil prices triggered risk appetite.
In the Asian session, the pound was lower against the yen, euro and the franc, but held steady against the dollar.
The pound, having advanced to more than a 2-week high of 1.5372 against the greenback at 6:15 am ET, pulled down to 1.5293. If the pound continues decline, it may challenge support near the 1.52 region.
The Labor Department released a report showing that initial jobless claims pulled back more than expected in the week ended October 3rd.
The report said initial jobless claims fell to 263,000, exceeding forecasts for a decline to 271,000.
After climbing to near a 2-week high of 184.12 against the Japanese yen at 6:30 am ET, the pound eased off to 183.39. The pound-yen pair closed Wednesday’s trading at 183.78. The pound is seen finding support around the 183.00 area.
The pound turned negative against the euro again, falling to 0.7378. At yesterday’s close, the pair was valued at 0.7335. A further downward move may take the pound to a support around the 0.745 mark.
Data from Destatis showed that Germany’s exports declined at the fastest pace in more than six years in August.
Exports plunged by seasonally adjusted 5.2 percent month-on-month in August, reversing a 2.2 percent rise in July. This was the biggest decline since January 2009, when it slid 6.9 percent.
The pound remained lower against the Swiss franc, with the pair trading at 1.4836. This is a 0.49 percent decline from Wednesday’s closing value of 1.4909. The next possible support for the pound-franc pair may be located around the 1.47 level.
Figures from the State Secretariat for Economic Affairs showed that Switzerland’s unemployment rate rose in September in line with economists’ expectations.
The seasonally adjusted jobless rate climbed to 3.4 percent from 3.3 percent in August.
The Federal Reserve publishes minutes of the September 16-17 meeting at 2:00 pm ET.
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