(RTTNews) - During early European deals on Thursday, the pound showed mixed trading against its major counterparts ahead of the Bank of England's interest rate decision.
While the pound slumped to an 8-day low against the dollar and the euro, it recouped its Asian session's loss against the yen and the franc. The pound thus recovered from a new multi-month low against the franc.
The Bank of England is expected to hold its key interest rate at a record low of 0.50% for a tenth consecutive month in its first monetary policy meeting of the New Year. The central bank is also expected to continue its GBP 200 billion asset purchase scheme to support the economy, which is expected to exit recession soon.
The monetary policy committee led by Governor Mervyn King is set to announce its decision on bank rate and asset purchase at 7.00 am ET.
The current interest rate has been the lowest rate since the central bank was established in 1694. The previous change in rate was a reduction of 0.5 percentage points in March 2009.
At 3:50 am ET Thursday, the pound touched an 8-day low of 1.5916 against the dollar and 0.9028 against the euro, compared to yesterday's close of 1.6019 and 0.8999, respectively. If the pound falls further, it may target 1.5835 against the dollar and 0.906 against the euro. At present, the UK currency is worth 1.5940 against the dollar and 0.9020 against the euro.
Against the currency of Switzerland, the pound is now worth 1.6447, up from a new multi-month low of 1.6414 at 3:00 am ET Thursday. The next target level for the pound-franc pair is seen at 1.664. At yesterday's close, the pair was quoted at 1.6466.
Switzerland's Federal Statistical Office said the consumer price index or CPI rose 0.3% year-on-year in December after recording zero growth in November. Economists had forecast 0.5% rise for December.
On a monthly basis, the CPI fell 0.2% in December after rising at the same pace in the previous month. Moreover, the statistical office said the average inflation rate for the year 2009 was negative 0.5%.
The pound that weakened to 147.10 against the yen at 1:20 am ET Thursday reversed its direction thereafter. The pound-yen pair is currently trading at 148.01 with 150.8 seen as the next target level. The pair was worth 147.90 at yesterday's close.
The yen fell sharply after Japan's newly appointed finance minister Naoto Kan has called for a weaker yen in order to aid the recovery of the Japanese economy.
