Forexpros – The pound extended losses against the U.S. dollar on Wednesday, falling to a one-month low after the Bank of England cut its short-term growth forecast and said further economic stimulus may be necessary as the global economic outlook deteriorates.
GBP/USD hit 1.5745 during European late morning trade, the pair’s lowest since October 20; the pair subsequently consolidated at 1.5761, shedding 0.38%.
Cable was likely to find support at 1.5680, the low of October 20 and resistance at 1.5826, the days high.
In its quarterly Inflation Report, the BoE said it now believes economic growth will be “significantly weaker” than it did in August, with the biggest threat posed by the debt crisis in the euro zone.
The report said the BoE now sees a strong chance that annual growth rates will be below 1% throughout 2012 and indicated that it may have to add to its GBP275 billion asset purchase program.
The central bank also said it expected inflation to fall to 1.3% in two years time, adding that it expects inflation to fall below its 2% target by the end of 2012.
The report came after official data showed that the unemployment rate in the U.K. jumped to a 15-year high of 8.3% in October, while the number of people without a job on the wider ILO measure rose to a record high.
Meanwhile, the number of people claiming jobless benefit rose by 5,300 last month, far below analysts’ forecasts of a rise of 20,400.
Elsewhere, the pound was fractionally higher against the euro, with EUR/GBP slipping 0.06% to hit 0.8550.
Later in the day, the U.S. was to release official data on consumer price inflation and industrial production.
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