The British pound plunged to a five-year trough versus the US dollar Wednesday following the Bank of England warned about the effect of a widely strengthening currency on British inflation.
Sterling got a small boost after Finance Minister George Osborne announced higher economic growth projections and lower taxes in the futures in his budget statement.
But against the greenback, the pound traded down 0.4% at $1.4687, near its earlier low of $1.4635.
Sterling erased 0.8% against the euro, trading at 72.385 pence, its lowest in nearly two weeks.
The BOE Monetary Policy Committee, in the minutes of its meeting last March 4 and 5, said policymakers were worried the currency might strengthen further, which could leave inflation below target for longer than expected.
It is normal the BOE would take note of that and recognize it… they were not attempting to talk the pound down… “I would imagine that they’re not afraid that the market is taking these conclusions,” said Ian Gunner, Currency Fund Manager at Altana Wealth.
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