The pound fell as minutes of the Bank of England’s most recent meeting showed most policy makers saw greater risks to the U.K. from a slump in the euro-area economy, damping investor bets on an increase in interest rates.
Sterling weakened versus most of its 16 major peers amid speculation the central bank’s Monetary Policy Committee will keep its key rate at a record low for longer than previously forecast. While two officials voted to increase it by 25 basis points and the remaining seven opted to keep it at 0.5 percent, the minutes showed pessimism about the global economy had increased. Short-sterling futures rose, another sign investors were reducing bets for higher borrowing costs.
“There’s no sign of hawkishness picking up yet,” said Ian Stannard, the London-based head of European foreign-exchange strategy at Morgan Stanley. “That’s going to keep rate expectations pushed back for the time being and that is going to keep sterling under pressure against the dollar.”