Pound Weakens as BoE Keeps Policy Unchanged, Climbs vs. Euro

The Great Britain pound dropped today against the US dollar and the Japanese yen after the Bank of England kept its official bank rate and the asset-purchase program unchanged. The sterling jumped versus the euro.
The BoE left its monetary policy unchanged at today’s meeting, maintaining the main interest rate at 0.5 percent and the asset purchases at £375 billion. The decision to keep the policy stable was made even after the growth forecast was revised down. Britain’s central bank is in a difficult position as inflation remains above the target, limiting the bank’s ability to ease the policy, while the recession calls for more accommodative measures.
The European Central Bank made the same decision, leaving its borrowing costs unchanged. That decision weaned the euro, allowing the sterling to gain on the shared 17-nation currency.
GBP/USD dropped from 1.6096 to 1.6044 and GBP/JPY slipped from 132.66 to 132.12, following the rise to 132.87 — the highest rate since April 2, as of 18:28 GMT today. Meanwhile, EUR/GBP ticked down from 0.8116 to 0.8072.

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