British pound falls to new low after US rate cut

Mark Carney, the Governor of the Bank of England

British pound fell to a 30-month low against the US dollar on Thursday as a result of continued Brexit uncertainties and US interest rate cut for the first time in a decade. The British currency was trading just below 1.210 before noon, continuing its downward trend after a brief respite on Wednesday. The pound lost 4% throughout July, and dropped below 1.23 against the US dollar for the first time on Monday since Article 50, the mechanism which started the Brexit process, was triggered in March 2017.

The Bank of England (BOE) pushed back against calls to cut interest rates on Thursday, leaving borrowing costs unchanged amid an intensifying risk of a no-deal departure from the European Union. With less than 100 days to go before the country is set to leave the bloc, the BOE’s nine-member Monetary Policy Committee, led by Mark Carney, the Governor of the Bank of England, unanimously voted to hold interest rates at 0.75%.

The British central bank also cut its growth forecasts for the UK economy, amid worries about Brexit and a slowing global economy. The BOE, which assumes Britain will avoid a Brexit shock, said it now expects to see growth of 1.3% both this year and next, down from 1.5% and 1.6% respectively in its May forecast. As Brexit remains central to British economic outlook, the pound will be sensitive to future developments and no-deal Brexit concerns will continue to drag the currency, analysts predicted.

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