Forex Pros – The pound extended losses against the U.S. dollar on Wednesday, dropping to a two-day low after minutes of the Bank of England’s most recent meeting showed more policymakers voted to keep interest rates at a record low.
GBP/USD hit 1.6112 during European late morning trade, the pair’s lowest since June 20; the pair subsequently consolidated at 1.6123, slumping 0.75%.
Cable was likely to find support at 1.6077, the low of June 16 and resistance at 1.6382, the high of June 15
The BoE voted 7-2 vote to keep interest rates at a record low of 0.5% this month, as most member judged that it was “appropriate to maintain the current stance of monetary policy.”
Policy makers voted 6-3 to keep interest rates on hold in May.
According to the minutes, Monetary Policy Committee members Martin Weale and Spencer Dale repeated previous calls for a 0.25% hike in the lending rate.
Ben Broadbent, the panel’s newest member, voted in favor of keeping rates on hold. Broadbent replaced Andrew Sentance, who had voted in previous meetings for a 0.5% rate hike.
The MPC voted 8-1 to maintain the central bank’s asset-purchase program at GBP200 billion, with Adam Posen repeating a call to boost the program by GBP50 billion.
Policymakers noted that the current weakness of demand growth was “ikely to persist for longer than previously thought. “Moreover, the fiscal challenges in the euro-area periphery highlighted the potential for further adverse shocks to demand.”
The pound was also lower against the euro, with EUR/GBP rising 0.46% to hit 0.8913.
Later in the day, the Federal Reserve was to announce its federal funds rate. The announcement will be followed with a press conference by Fed Chairman Ben Bernanke to discuss the bank’s rate statement.
ForexPros.com
