Sterling fell to four-month lows against the euro and close to 19-month lows against the dollar on Wednesday after Bank of England rate-setting minutes boosted expectations borrowing costs would fall as early as August. US Federal Reserve chief Alan Greenspan bolstered forecasts of higher US interest rates with an upbeat assessment of the US economy, further weighing on the pound.
"The minutes have cleared the air, got the market fully focused on a rate cut and perhaps implied sterling is, whilst not over the worst, nearly over the worst," said Bear Stearns currency strategist Steve Barrow.
Four out of nine BoE policymakers voted for a 25 basis point interest cut at July's monetary policy meeting when rates were held steady at 4.75 percent.
Analysts polled by Reuters expected a 6-3 split, after a 7-2 vote for steady rates in June.
By 1411 GMT, sterling traded down about 0.4 percent against the euro at 69.43 pence, having earlier hit its lowest rate since March 17 at 69.67 pence.
The pound traded down 0.34 percent against the dollar at $1.7340. It earlier fell to $1.7323, within a fifth of a cent of 19-month lows hit in the wake of July 7 London bomb attacks that killed 56 people.
Sterling's trade-weighted index remained close to its lowest value in more than a year hit earlier at 97.9.
The dollar rose after Federal Reserve chief Alan Greenspan said US growth was solid and the Fed should keep raising interest rates, during his semi-annual testimony to Congress on Wednesday.
Comments
Comments are closed.