The British pound slumped against other major currencies after the Bank of England trimmed Britain’s economic growth and inflation forecasts, indicating a long wait for a rise in interest rates.
The dollar was mixed, firming against the euro and slipping against the yen.
“A specter is haunting Europe — the specter of economic stagnation, with growth disappointing again and confidence falling back,” BoE Governor Mark Carney told a press conference after the central bank released its latest quarterly forecasts.
Gross domestic product, or economic output, is now forecast to expand 2.9 percent next year, down from a previous estimate of 3.0 percent, the bank said, citing economic strains in the neighboring eurozone.
With the BoE predicting also lower inflation despite long-awaited wages growth, analysts said Britain’s central bank was unlikely to raise its record-low interest rate of 0.50 percent until late 2015.
“The cuts to both the growth and inflation forecasts comes after several weeks of disappointing economic data, culminating in UK inflation sitting at a five-year low,” said Christopher Vecchio at DailyFX.
“Governor Mark Carney insisted today that the decision to raise rates was data dependent as it has always been, and traders are taking that as a sign that any rate hikes will likely be pushed back.”
Global regulators, meanwhile, announced $4.2 billion in fines against six major US and European banks for attempting to manipulate foreign exchange markets.
The hefty fines, unveiled in London, Washington and Zurich, follow a worldwide probe into the scandal over the $5.3-trillion-per-day forex market, around 40 percent of which takes place in the British capital.
Fines were imposed on British banks HSBC and Royal Bank of Scotland; US peers Bank of America, Citigroup and JPMorgan Chase; and Swiss lender UBS.
The Exchange rates as at 2200 Hrs Tuesday:
2200 GMT Wednesday Tuesday
EUR/USD 1.2438 1.2474
EUR/JPY 143.70 144.38
EUR/CHF 1.2021 1.2031
EUR/GBP 0.7882 0.7834
USD/JPY 115.52 115.74
USD/CHF 0.9663 0.9644
GBP/USD 1.5781 1.5920