Pound slips to multi-month low as BoE leaves rates on hold

The pound retreated on Thursday, after the Bank of England (BoE) delivered its latest interest rate decision.

Sterling remains on the defensive so far this morning, with GBP/EUR subdued at €1.1522 and GBP/USD muted at $1.2283. GBP/CAD has ticked down to CA$1.6542, while GBP/AUD and GBP/NZD dip to AU$1.9115 and NZ$2.0684, respectively.

Coming up, will some lacklustre UK PMIs extend the pound’s losses today?

What’s been happening?

The pound stumbled yesterday as the Bank of England left interest rates on hold following its latest policy meeting.

The decision to hit pause on its hiking cycle was finely balanced, with the bank’s Monetary Policy Committee voting 5-4 in favour of leaving rates unchanged.

However, the close decision, coupled with the BoE leaving the doors open to a possible rate hike in the future, ultimately helped to temper the pound’s losses.

Meanwhile, the US dollar continued to catch bids on Thursday, following the Federal Reserve’s ‘hawkish’ pause on Wednesday. With the upside in USD exchange rates being reinforced by last week’s initial jobless claims as new unemployment claims fell to their lowest level since January.

At the same time, the euro firmed yesterday as it was supported by a cautious market mood.

What’s coming up?

Today’s session was kicked off by the publication of the UK’s latest retail sales figures. August’s figures fell just below expectations, with sales rising 0.4% versus the 0.5% forecast, applying some pressure to the pound in the process.

Sterling could come under even more pressure with the release of the UK’s latest PMIs as these are expected to report growth in both the manufacturing and service sectors continued to decline this month.

The Eurozone’s own PMIs may prove even more damaging for the euro. As economists forecast September’s preliminary figures will show the contraction in the bloc’s private sector deepened again.

Closing out the session will be the release of the latest US PMIs. Expect to see the US dollar outperform the pound and euro if the US service sector continued to expand this month.