The British currency plummeted against major currencies after the report of Bank of England’s interest rate decision in New York morning deals on Thursday. Today, the Monetary Policy Committee of the Bank of England, led by Governor Mervyn King, decided to retain the key interest rate at a historic low of 0.5%. The decision came in line with economists’ expectations. The previous change in the rate was a reduction of 0.5 percentage points in March 2009.
At the end of the two-day rate setting meeting, the BoE also maintained the stock of asset purchases financed by the issuance of central bank reserves at GBP 200 billion. “The Committee will continue to monitor the appropriate scale of the asset purchase programme and further purchases would be made should the outlook warrant them,” BoE added.
The pound extended its previous session downtrend against the US dollar and the Japanese yen in New York morning today. As of now, the pound is worth new multi-month lows of 1.5739 against the US dollar and 140.02 versus the yen, compared to Wednesday’s closing values of 1.5894 and 144.63, respectively.
Against the Swiss franc, the UK’s sterling also dropped further and fell to a new 10-day low of 1.6761, by about 10:05 am ET. The pair that closed yesterday’s New York session at 1.6843, is now worth 1.6797. The pound has been in a downward channel against the franc for the past 1 week.
At the same time, the British currency showed choppy performance against the euro in today’s New York morning deals. Presently, the pound is worth 0.8730 versus the euro, compared to yesterday’s New York session close of 0.8745.
The European Central Bank today kept its key interest rate unchanged at a record low for the ninth consecutive month to support the economy that is recovering from the worst recession.