Pound slides against Singdollar after Bank of England's aggressive stimulus

The British Pound. The pound retreated on Thursday (August 4) following aggressive moves by the Bank of England to boost the economy after the British vote to exit the EU.
The British Pound. The pound retreated on Thursday (August 4) following aggressive moves by the Bank of England to boost the economy after the British vote to exit the EU.PHOTO: EPA

NEW YORK (AFP) - The pound retreated on Thursday (Aug 4) following aggressive moves by the Bank of England to boost the economy after the British vote to exit the European Union.

The BOE, as expected, slashed interest rates to a record low 0.25 per cent. It also delivered a £170-billion ($227-billion) stimulus package that surprised many analysts.

The moves came as the BoE cut its economic forecasts for 2017 and 2018.

"We're living through a time of considerable uncertainty," said BOE governor Mark Carney.

The pound slid against the Singapore dollar and was trading 1.34 per cent lower at S$1.7597 from its close of S$1.7841 on Thursday. Overnight, sterling fell 1.5 per cent to US$1.3114.

The pound has weakened by about 15 per cent against the Singdollar starting 2016 at S$2.0847. Sterling plunged 4 per cent to levels around S$1.85 on the day Britons voted to leave the EU.

The BOE package "snapped a streak of underwhelming action by global central banks recently" and "should keep the pound broadly pressured", said Omer Esiner of Commonwealth Foreign Exchange.

The US dollar was mixed against other currencies ahead of Friday's US jobs report for July, expected to show the US added 185,000 jobs, down from 287,000 in June.

The report will be scrutinised as to whether it implies a greater chance the US Federal Reserve will lift interest rates.

"While the leading indicators for non-farm payrolls point to a decline, the number may not be that bad," BK Asset Management analyst Kathy Lien said.

"There's no doubt that the US economy is outperforming its peers, which should make US assets and the US dollar more attractive in comparison."

WITH ADDITIONAL INFORMATION FROM THE STRAITS TIMES