The pound slipped against its major counterparts in European trading on Thursday, after the Bank of England unanimously maintained its interest rate and downgraded its U.K. growth forecasts for this year and the next, citing worsening global growth prospectus.
The Monetary Policy Committee, headed by Mark Carney, voted 9-0 to hold the interest rate at 0.50 percent, the bank said in a statement.
The rate has been held at this record-low level since 2009. Ian McCafferty alone had sought a 25 basis point rate in the previous few months.
Policymakers voted unanimously to maintain quantitative easing at GBP 375 billion.
Further, the central bank downgraded its 2016 growth outlook for the U.K. to 2.2 percent from 2.5 percent and that for 2017 to 2.4 percent from 2.7 percent.
Inflation is projected to increase further in the coming months but a little less quickly than anticipated in November, largely reflecting recent falls in oil prices.
In other economic news, data published by Lloyds Banking Group’s Halifax division showed that U.K. house price growth increased unexpectedly in January.
House prices advanced 9.7 percent year-on-year in the three months to January, following a 9.5 percent increase in the preceding three months.
The pound showed a mixed performance in Asian deals. While the currency held steady against the yen and the euro, it weakened slightly against the greenback. Against the franc, it rose slightly.
In the European session, the pound depreciated to a 3-day low of 1.4556 versus the Swiss franc, following an advance to 1.4711 at 3:45 am ET. Continuation of the pound’s downtrend may take it to a support around the 1.445 mark. The pound-franc pair finished yesterday’s trading at 1.4660.
Survey data from the State Secretariat for Economic Affairs showed that Switzerland’s consumer confidence improved for a second consecutive time in the three months to January, mainly led by better labor market expectations.
The consumer confidence index climbed to -14 from -18 in the three months to October. However, the score remained below its long-term average of -9.
The pound, having advanced to 172.47 against the Japanese yen at 8:30 pm ET, reversed direction and edged down to 171.09. The pound is poised to test support around the 170.00 zone.
Pulling away from an early new 4-week high of 1.4665 against the greenback, the pound weakened 0.82 percent to 1.4545. On the downside, the pound may locate support around the 1.44 mark. The pair was worth 1.4602 when it ended Wednesday’s trading.
Continuing its early weakness, the pound slid to a 2-week low of 0.7678 against its European counterpart. This marks a 1 percent decline from yesterday’s closing value of 0.7601. If the pound extends slide, 0.78 is possibly seen as its next support level.
In a lecture delivered at the Bundesbank, European Central Bank President Mario Draghi said that adopting a wait-and-watch attitude and acting too late on prolonged low inflation is riskier than taking early measures as the former approach could erode confidence.
“And if that were to happen, we would need a much more accommodative monetary policy to reverse it,” Draghi said.
Looking ahead, U.S. weekly jobless claims for the week ended January 30 and U.S. factory orders data for December are slated for release in the New York session.
Federal Reserve Bank of Dallas President Robert Kaplan is due to participate in a discussion of Global Economic Conditions at an event hosted by the Real Estate Council in Dallas at 8:30 am ET.
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