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Pound Falls As BoE Split On Interest Rate

pound jun20 07nov19 lt

The pound slipped against its key counterparts in the European session on Thursday, after the Bank of England kept the benchmark rate unchanged and indicated willingness to cut rates in future against the backdrop of rising challenges from Brexit and weaker global economy.

At the rate-setting meeting, the Monetary Policy Committee, governed by Mark Carney, voted 7-2 to maintain the bank rate at 0.75 percent.

Jonathan Haskel and Michael Saunders sought a quarter-point reduction to ensure a sustained return of inflation to the target.

The committee led by Governor Mark Carney unanimously decided to retain the stock of corporate bond purchases at GBP 10 billion and government bond purchases at GBP 435 billion.

The committee judged that the existing stance of monetary policy is appropriate. Monetary policy could respond in either direction to changes in the economic outlook in order to ensure a sustainable return of inflation to the 2 percent target, the BoE said.

"If global growth failed to stabilize or if Brexit uncertainties remained entrenched, monetary policy might need to reinforce the expected recovery in UK GDP growth and inflation."

Data from the Lloyds Bank subsidiary Halifax and IHS Markit showed that UK house prices dropped at a slower pace in October.

House prices fell 0.1 percent in October from the previous month, when prices were down 0.4 percent.

The currency depreciated against its key counterparts in the Asian session, excep the euro.

The pound was 0.5 percent lower at a 2-day low of 0.8645 against the euro, following a gain to 0.8602 at 3:15 am ET. At Wednesday's close, the pair was valued at 0.8608. Extension of the pound's downward trading may lead it to a support around the 0.88 region.

Data from Destatis showed that Germany's industrial production declined more than expected in September. It fell 0.6 percent month-on-month in September, reversing a 0.4 percent rise in August. Economists had forecast a moderate drop of 0.3 percent.

The pound lost 0.5 percent to a 9-day low of 1.2809 against the greenback, after rising as high as 1.2878 at 5:00 am ET. The pound-greenback pair had finished deals at 1.2855 on Wednesday. Should the pound falls further, 1.24 is possibly located as its next support level.

The U.K. currency dipped 0.6 percent against the franc, touching a 2-week low of 1.2705. This followed a high of 1.2787 seen at 5:00 am ET. At yesterday's close, the pair was trading at 1.2762. Further decline may lead the pound to a support around the 1.23 area.

The pound pulled back to 139.75 against the yen, not far from a 9-day low of 139.49 it touched at 10:30 pm ET. The pound was trading at 140.08 per yen at yesterday's close, and is poised to challenge support around the 136.5 mark.

In economic releases, U.S. consumer credit for September will be released in the New York session.

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