Pound weakens further on US jobs news and Bank warning
- 5 July 2013
- From the section Business
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."