The Cable fell to six-month lows against the dollar on Wednesday after the Bank of England cut its outlook for growth and said inflation would remain above target until early 2016. GBP/USD hit 1.5534 during European morning trade, the pair’s lowest since August 3; the pair subsequently consolidated at 1.5556, shedding 0.66%. Cable was likely to find support at 1.5457, the low of July 25 and resistance at 1.5688, the session high. The pound fell against the dollar after the BoE said the economy will experience a “slow but sustained recovery” over the next three years “mirroring the relatively subdued prospects for both global demand and the supply capacity of the domestic economy”. The report said inflation is likely to be at around 2.3% in two years’ time, sharply higher than the 1.8% forecast in November, before falling back below the bank’s 2% target in the first quarter of 2016. The bank said that economic growth was likely to remain below its pre-crisis levels until 2015 and that it was ready to provide more stimulus to bolster the recovery. The bank expects a slight rise in gross domestic product in the first quarter of this year, with annual GDP growth of around 1.9% in two years’ time. Elsewhere, sterling hit session lows against the euro, with EUR/GBP jumping 0.89% to 0.8664.
EasyForexNews Research Team