Pound Mixed Againts Major

(RTTNews) - In early deals on Wednesday, the British pound strengthened against the euro but it trended down against the rest of majors. Investors considered UK's fourth quarter GDP data and minutes of the Bank of England's recent MPC meeting. The sterling strengthened against its European counterpart amid the across the board weakening of the latter.

Latest report from the UK national statistical office showed that the British economy grew at a slower pace of 2.9% year-on-year in the fourth quarter, compared to 3.3% in the third quarter. Sequentially, the growth rate stood at 0.6% in the fourth quarter, slightly down from 0.7% recorded in third quarter, the lowest growth rate since the third quarter of 2006. But the economy grew more than analyst's prediction of 0.5%.

Also, BoE's Monetary Policy Committee voted 8-1 to hold the key interest rate at 5.5%, data released at 4:30 am ET showed. David Blanchflower voted against, preferring a reduction of 25 basis points. The MPC kept rates on hold this month after voting unanimously for a cut in December.

The Bank of England Governor Mervyn king said yesterday that rising food prices, energy and imports may force him to write more than one letter of explanation to the Chancellor, as the consumer prices hit 2.1% above the central bank's target rate of 2.0%. Governor of the British central bank has only written one such letter - in April last year - since the institution gained independence in 1997.

The US Federal Reserve unexpectedly lowered the interest rates by 75 basis points to 3.5% yesterday. The surprise rate cut was part of a broad effort to stop the economy from slipping into a clear recession.

The British pound fell to 1.9534 against the US dollar at about 6:05 am ET, Wednesday. The pound-dollar pair was worth 1.9611 at yesterday's close.

In the Asian deals on Wednesday, the British pound declined against the Japanese Yen. The pair added to its losses during the European session and touched 206.96 at 6:00 am Eastern Time, down from 208.76 late Tuesday in New York.

The pound equaled a 1-week low of 2.1373 against its Swiss counterpart at about 11:40 pm ET, Tuesday. The pound started moving higher thereafter, but slipped after hitting a high of 2.1529 at about 3:25 am ET. Currently, the pair is trading near 2.1387.

The UK's sterling weakened to 0.7485 against the euro at about 1:45 am ET, Wednesday. However, the sterling traded higher thereafter and reached 0.7443 against the euro at about 4:40 am ET. The pound that closed yesterday's trading against the common currency at 0.7463 is now worth 0.7454.

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