Pound weakens further on US jobs news and Bank warning

Pound Sterling v US Dollar

Last Updated at 25 Jul 2014, 18:16 ET *Chart shows local time GBP:USD intraday chart
£1 buys change %
1.6975
0.00
-0.00

The pound fell below $1.49 against the dollar on Friday, close to a three-year low, as markets digested the prospect of UK interest rates staying at 0.5%, and the strengthening US economy.

Sterling traded as low as $1.4858 at one point, although it recovered to $1.49 in late London trading.

It was a fifth of a cent above the low of $1.4831 set in March, the weakest level since June 2010.

The slide began with the Bank of England saying rates could stay flat.

News in afternoon trading that US employment grew by 195,000 in June gave the dollar more support.

The US data also revised up the previous two months' estimates by a combined 70,000 jobs, adding further to speculation that the US Federal Reserve may start raising interest rates within the next 12-18 months.

The Bank of England's statement on Thursday came as the Bank held interest rates at 0.5% and kept its (QE) quantitative easing programme of buying up UK government debt unchanged.

The decisions were made at the first meeting of the Bank's Monetary Policy Committee since Mark Carney took over as governor.

Harry Adams, managing director of foreign exchange forecaster Argentex called the decision to release a statement alongside the interest rate announcement, despite there being no change in policy as "significant".

"This statement suggests that further quantitative easing is likely and interest rates will remain low for the foreseeable future," he said.

"Despite the recent improvement in economic data from the UK, the pound is being beaten up by global investors as the view is that the British currency will continue to offer very little return of interest."

More on This Story

Related Stories

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

Features

  • Stained glass of man with swordFrance 1 England 0

    The most important battle you have probably never heard of


  • Golden retriever10 things

    Dogs get jealous, and nine more nuggets from the week's news


  • Pro-Israel demonstrators shout slogans while protesting in Berlin - 25 July 2014Holocaust guilt

    Gaza conflict leaves Germans confused over who to support


  • The emir of Kuwait Sheikh Sabah al-Ahmad al-Jaber al-SabahFreedoms fear

    Growing concern for rights as Kuwait revokes citizenships


From BBC Capital

Programmes

  • Leader of Hamas Khaled MeshaalHARDtalk Watch

    BBC exclusive: Hamas leader on the eagerness to end bloodshed in Gaza

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.