The pound was little changed before the Bank of England announces its latest monetary policy decision, with economists predicting it will keep its bond-buying target and benchmark interest rate unchanged.
Sterling dropped to a three-week low versus the U.S. currency. The central bank, which will announce the decisions at noon in London, has said it will keep the key rate at a record low until unemployment, currently at 7.7 percent, falls below 7 percent. The pound weakened versus all of its 16 major counterparts yesterday after a report showed U.K. industrial production slumped in August, casting doubt on the strength of the economic recovery.
The pound traded at $1.5931 as of 7:43 a.m. London time after falling to $1.5914, the lowest since Sept. 18. The U.K. currency was at 84.73 pence per euro after depreciating to 84.87 yesterday, the weakest since Sept. 3.
Sterling declined 0.6 percent in the past week, according to Bloomberg Correlation-Weighted Indexes that track 10 developed-nation currencies. The dollar rose 1 percent, while the euro was little changed.
The Bank of England will keep its key interest rate at 0.5 percent and its asset-purchase target at 375 billion pounds, according to economists in separate Bloomberg News surveys. The pound slid 0.2 percent versus the dollar and U.K. government bonds fell after the previous announcement on Sept. 5, when officials left policy unchanged.
Gilts handed investors a loss of 2.7 percent this year through yesterday, according to Bloomberg World Bond Indexes. German bonds dropped 1.7 percent and Treasuries declined 2.6 percent.
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