FX Roundup: Pound corrects as BoE leaves interest rates unchanged
The pound sterling headed lower on Thursday, shedding some of the previous session’s gains as the Bank of England decided to keep its main policy settings unchanged in line with market expectations.
The Monetary Policy Committee decided to keep Bank Rate steady at 0.5% by a majority of 8 to 1, while the decision to keep the size of its asset purchase facility at £375bn was unanimous.
Rate-setters at the Bank of England said "some slowdown" in the pace of the expansion and employment growth had been expected as a natural consequence of the economy approaching a balance between its supply capacity and strengthening demand.
"The path that Bank Rate will actually follow over the next few years will depend on economic circumstances," the committee added further.
At 1400BST, the pound was down 0.25% and 0.44% against the dollar and the euro changing hands at $1.5281 and €1.35720 respectively.
Jane Foley, senior FX strategist at Rabobank said, “There are concerns about slower growth in China and many emerging markets. Against this backdrop the money market has pushed out its expectations of the first BoE rate hike to late 2016/early 2017. We currently do not see the BoE lifting rates until August 2016.”
Meanwhile, the dollar fell against the yen, shedding 0.11% changing hands at JPY119.88, while the euro rose 0.24% against the greenback changing hands at €1.1264.
The dollar was broadly flat against its Canadian counterpart changing hands at CAD$1.3060, remaining within sight of the USD/CAD 1.30 level.
Elsewhere, the Aussie-Kiwi rally against the dollar came to a halt, as the New Zealand dollar fell 0.08% against the greenback to change hands at US$0.6605, while the Australian dollar fell 0.37% changing hands at US$ 0.7181.