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The British pound dropped on Thursday following the Bank of England's first monetary policy update and inflation report of the year, in which it left interest rates unchanged, in line with market expectations. The central bank said that a continued, gradual tightening of monetary policy was necessary given its forecast for inflation, but warned of various factors weighing on the U.K. economy. The benchmark interest rate remained unchanged at 0.75%. Fading global economic growth, reflecting the tightening of financial conditions and the impact of trade tensions on the business environment, as well as uncertainties surrounding Brexit will weigh on the U.K. economy, said the central bank. With regards to Brexit, the bank reiterated its stance that "the appropriate path of monetary policy will depend on the balance of these effects on demand, supply and the exchange rate. The monetary policy response to Brexit, whatever form it takes, will not be automatic and could be in either direction." Meanwhile, consumer price inflation is expected to converge with its 2% target in the near-term on the back of a drop in oil prices. Sterling, which had started the session weaker versus its U.S. rival, extended its losses on the back of the BOE release, diving to a low of $1.2853. The pound last bought $1.2878, compared with $1.2931 late Wednesday in New York. Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news.