Pound Falls as UK Economy Threatened by Europe’s Crisis
The Great Britain pound slumped today after the Bank of England trimmed its growth forecast as the crisis in Europe escalates. Positive employment data did not manage to help the weakening currency.
BoE Governor Mervyn King said at today’s press conference that the central bank cut its growth forecast. The Governor explained that the European debt crisis remains a main threat to the UK economy as the eurozone is the main trading partner of the United Kingdom. King stated that it is impossible to estimate results of the worst-possible outcome of the crisis and added:
But even the threat of those more extreme outcomes is enough to affect the outlook for the UK, through its effect on bank funding costs, asset prices, including the exchange rate, and the confidence of households and businesses.
BoE chief was not completely, pessimistic, though and voiced belief that the Great Britain will recover from the current problems.
Employment data showed that King’s optimism may be justified. The unemployment rate unexpectedly fell by 10 basis points to 8.2 percent in the first quarter of 2012 and the number of people claiming Jobseeker’s Allowance provided a pleasant surprise, falling by 13,700 in April from March. Alas, the positive report did not help the pound.
GBP/USD was down from 1.5992 to 1.5915 as of 23:31 GMT, touching 1.5888 today — the low not seen since April 17. GBP/JPY slid from 128.24 to 127.90, reaching 127.65 intraday — the lowest level since April 17. EUR/GBP rose from 0.7956 to 0.7991.
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Earlier News About the Great Britain Pound:
- UK Pound Drops Against Stronger Euro (2012-05-15)
- Pound Gains, Threatens Economy of UK (2012-05-14)
- GBP Falls vs. USD & JPY, Gains vs. EUR Over This Week (2012-05-12)
- Pound Drops as Consumer Confidence Worsens (2012-05-11)
- Bank of England Avoids Quantitative Easing, Pound Profits (2012-05-10)