Pound Drops Amid BoE Rate Cut Speculation

(RTTNews) - The British pound weakened against other major currencies in the European session on Thursday, as traders anticipate an interest rate cut by the Bank of England (BoE) in February.

Recent data showed that the economy logged a slower-than-expected growth and inflation eased unexpectedly. Consequently, it is generally expected that the BoE would reduce the key interest rate by 25 basis points to 4.50 percent at its policy meeting on February 6.

Amid much uncertainty over the impact of U.S. President Donald Trump's proposed tariffs on several countries, traders looked ahead to his keynote address at the World Economic Forum in Davos, Switzerland, later in the session for further direction.

In the European trading today, the pound fell to a 2-day low of 1.2294 against the U.S. dollar, from an early high of 1.2324. On the downside, 1.20 is seen as the next support level for the pound.

Against the euro, the Swiss franc and the yen, the pound edged down to 0.8457, 1.1154 and 192.40 from early highs of 0.8450, 1.1171 and 193.01, respectively. If the pound extends its downtrend, it is likely to find support around 0.86 against the euro, 1.10 against the franc and 188.00 against the yen.

Looking ahead, the Confederation of British Industry releases Industrial Trends survey results at 6:00 am ET in the European session. The order book balance is forecast to improve to -35 percent in three months to January.

In the New York session, U.S. weekly jobless claims, Canada retail sales data for November, U.S. KC Fed manufacturing index for January and U.S. EIA crude oil data are slated for release.

At 10:00 am ET, the European Commission releases flash euro area consumer confidence survey data. The sentiment index is seen rising to -14.0 in January from -14.5 in December.