The British currency extended its previous session downtrend against major currencies following the announcement of Bank of England’s interest rate decision and some other economic reports in New York morning deals on Thursday. The pound dropped to new multi-month low against the Swiss franc and a new multi-week low versus the euro.
The Bank of England today left its key interest rate unchanged at a historic low and maintained the size of the quantitative easing at 200 billion pounds to underpin the fragile economy amid severe fiscal consolidation.
With above-target inflation and a weak growth outlook, the central bank is likely to keep rates unchanged well into 2011.
At the end of a two-day rate setting meeting, policy makers led by Governor Mervyn King, decided to hold the official Bank Rate paid on commercial bank reserves at 0.5%. The current rate is the lowest since the central bank was established in 1694.
The U.K. economy grew 0.7% in the second quarter of this year, more than double the growth recorded in the first quarter but slower than in the three months ending in May, the National Institute of Economic and Social Research, or NIESR, said Thursday.
The leading economic research institute revised its growth estimate for the three months ending in May to 0.9% from the 0.6% growth reported initially. In the first quarter, the gross domestic product rose 0.3%.
The annual rate of growth, according to the institute, was 2.9% during the three months through June, slower than 3.6% growth during the three months ending in May. In the first quarter, GDP rose 1.2% annually.
U.K. industrial production recorded a monthly growth of 0.7% in May, reversing a revised fall of 0.7% in April, data from Office for National Statistics showed Thursday. The expected increase was only 0.4%.
The Office for National Statistics also reported that manufacturing output moved up 0.3% month-on-month compared to 0.8% drop in April. At the same time, output increased 4.3% annually, following April’s 3% rise. Economists were looking for a monthly rise of 0.3% and an annual 4.5% increase.
Extending European session downward trading, the pound declined further against the euro and the Swiss franc in New York mid-day deals today. At around 12:25 pm ET, the sterling slipped to a new multi-month low of 1.5890 against the franc and 0.8382 versus the euro, which may be compared to yesterday’s closing values of 1.5983 and 0.8323, respectively.
Against its US counterpart, the pound plunged in today’s New York deals from early European session’s 2-month high of 1.5243. The pound-greenback pair that closed Wednesday’s New York session at 1.5191, fell to 1.5105 by about 11:50 am ET. Currently, the pair is worth 1.5118.