The pound extended its early slide against its major counterparts in the New York session on Wednesday as investors await outcome of the Bank of England's monetary policy meeting due tomorrow.
Bank of England is likely to come up with additional stimulus as the current domestic economic situation warrants an immediate action to prevent the economy from sinking deeper into recession.
The minority in the Monetary Policy Committee voting for quantitative easing last month could turn into a majority this week and provide the U.K. economy with another GBP 50 billion additional stimulus. This will take the size of asset purchase programme to GBP 375 billion from GBP 325 billion
The nine-member MPC is seen leaving the key interest rate unchanged at a historic low of 0.50 percent.
The pound was also under pressure after Barclay's former chief executive officer Bob Diamond appeared before the UK Parliament for testimony on recent Libor scandal.
In economic news, British service sector expanded at the slowest pace in eight months in June, data from a survey by Markit Economics and the Chartered Institute of Purchasing & Supply showed today.
The seasonally adjusted purchasing managers' index (PMI) for the service sector dropped to 51.3 in June from 53.3 in May, hitting the lowest level since last October.
The pound declined to 1.5601 against the U.S. dollar in a gap of 5 days. The next downside target level for the pound is seen at 1.55. The pound-greenback pair closed Tuesday's deals at 1.5691.
The British currency hit 2-day lows of 0.8056 against the euro and 124.49 against the yen from yesterday's close of 0.8038 and 125.23, respectively. On the downside, the pound may target 0.808 against the euro and 124.00 against the yen.
Retail sales in Eurozone increased unexpectedly in May, partly reversing previous month's decline, the latest figures from Eurostat showed today.
Retail sales rose 0.6 percent month-on-month in May. Economists expected no change in the retail trade volume during the month. This followed a 1.4 percent fall in sales in the previous month.
Against the franc, the pound that ended Tuesday's trading at 1.4949 reached 1.4919, its lowest level since July 2. If the pound slides further, it may target 1.49 level.
The U.S. financial markets are closed for the Independence Day holiday.
by RTT Staff Writer
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