Sterling was unruffled by the Bank of England's widely expected decision to hold interest rates unchanged on Thursday, holding above a recent eight-month low against the euro and three-week low versus the dollar.
The BoE kept interest rates at 4.75 percent for the second month running and left analysts pondering whether more rate hikes will still come in the current monetary tightening cycle.
And with rates hikes running out of steam, the pound is likely to remain under pressure if economic data continues to disappoint, analysts said.
"There was no reaction to the Bank of England," said Aziz McMahon, currency strategist at ABN AMRO in London.
"The rate hike cycle is at an end or close to it, and it is happening at a much earlier stage than in other places."
At 1430 GMT sterling traded steady on the day at 68.93 pence per euro, after hitting an eight-month low of 69.17 on Wednesday. It was also unchanged at $1.7810.
The pound's fall against its trade-weighed index to its lowest level since late January, originally hit on Wednesday after disappointing manufacturing data, reinforced expectations of no change in interest rates.
"We are fundamentally bearish on the pound in the medium term," said Kamal Sharma, foreign exchange strategist at Dresdner Kleinwort Wasserstein in London.
The BoE has raised rates five times since last November from a low of 3.5 percent. But financial markets are currently pricing in just a one-in-three chance of interest rates rising to 5.0 percent by the year-end.
Comments
Comments are closed.