Pound Falls As BoE Keeps Rates Unchanged
May 09 2024 - 4:46AM
RTTF2
The British pound weakened against other major currencies in the
late European session on Thursday, after the Bank of England
maintained its key policy rate for the sixth consecutive
meeting.
The Monetary Policy Committee decided to hold the Bank Rate at
5.25 percent again in a split vote. The current bank rate is the
highest since early 2008.
While seven members judged that maintaining the rate at the
current level was warranted, Swati Dhingra and Dave Ramsden sought
a quarter-point reduction at the meeting.
Dhingra and Ramsden said the Bank Rate needed to become less
restrictive to enable a smooth and gradual transition in the policy
stance, and to account for lags in transmission.
"The MPC remained prepared to adjust monetary policy as
warranted by economic data to return inflation to the 2% target
sustainably," the bank said.
The bank forecast the economy to grow only 0.2 percent in the
second quarter after an estimated 0.4 percent growth in the first
quarter.
Investors became cautious as uncertainty over Fed rate cuts
deepened, and Israel forces pushed ahead with attacks on Rafah.
The British sterling traded higher against other major
currencies ahead of the BOE rate decision.
In the late European session, the pound fell to more than a
2-week low of 1.2446 against the U.S. dollar, from an early high of
1.2502. The pound may test support near the 1.23 region.
Against the euro and the Swiss franc, the pound dropped to more
than 2-week lows of 0.8620 and 1.1320 from an early 2-day highs of
0.8591 and 1.1367, respectively. If the pound extends its
downtrend, it is likely to find support around 0.87 against the
euro and 1.12 against the franc.
The pound edged down to 194.06 against the yen, from a early
1-week high of 194.87. The pound may test support near the 190.00
region.
Looking ahead, U.S. weekly jobless claims data is due to be
released in the New York session.