Sterling hit a 16-day low against the dollar on Thursday, despite some brief respite after the Bank of England's policy statement, dominated by uncertainty over how Britain will ease its coronavirus lockdown and Brexit.
As broadly expected, the BoE held rates steady and announced no further stimulus, saying it was ready to take further action to counter the coronavirus pandemic's fallout.
The government is due to announce possible changes to social restrictions on Sunday. A spokesman said that Prime Minister Boris Johnson would announce a very limited easing of lockdown measures.
In what it called an illustrative scenario, the BoE forecast Britain's biggest economic slump in over 300 years in 2020, with a 14% contraction in growth, then a 15% bounceback in 2021.
The pound strengthened to as much as $1.2418 after the announcement, but steadily declined from around 1100 GMT, reaching a low of $1.2266. Sterling was last at $1.2274, falling below $1.23 for the first time in two weeks, down 0.6% since New York's close.
Against the euro, which also saw a brief post-BoE rally, it was last at 87.78 pence, down around 0.4%. The central bank's Monetary Policy Committee kept the Bank Rate at its all-time low of 0.1% and left its target for bond-buying, most of it British government debt, at 645 billion pounds ($797 billion).
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