Investing.com - The pound fell to session lows against the dollar on Thursday after the Bank of England left monetary policy on hold, in a widely anticipated decision.
GBP/USD was down 0.18% to 1.5943 from around 1.5961 ahead of the announcement.
The drop in the pound came after the Bank of England’s monetary policy committee voted to leave U.K. interest rates at their current record lows of 0.5%.
The MPC also made no changes to its asset purchase scheme.
The decision came a day after data showed that the U.K. service sector expanded at the slowest rate in 17 months in October, adding to indications that the rate of the economic recovery is cooling.
The report prompted investors to push back expectations for a rate hike by the BoE and initially sent the pound to one-year lows against the dollar.
The pound was also weaker against the euro, with EUR/GBP rising 0.49% to 0.7852, from 0.7844 earlier.
Investors were awaiting the outcome of the European Central Bank’s meeting later Thursday after the Bank of Japan’s surprise stimulus move late last week fuelled expectations that it will soon follow suit.
Most analysts were expecting the ECB to keep interest rates on hold at record lows and to refrain from implementing any new easing measures.
However markets were seeking assurances that the central bank remains prepared to implement additional stimulus measures if necessary, in order to spur growth and inflation in the euro area.
The bank’s latest policy announcement was given extra significance following recent reports of tensions within the ECB over President Mario Draghi’s leadership.
Data on Thursday showed that German factory orders rose just 0.8% in September, well below forecasts of a 2.3% increase.
The weak data fuelled concerns over the outlook for the euro area’s largest economy.
Sterling had a subdued reaction earlier in the day after official data showed that U.K. industrial output rose 0.6% in September, beating expectations for a 0.4% gain.
On a year-over-year basis, industrial output rose 1.5%, in line with forecasts.
Manufacturing production increased by 0.4% from a month earlier, slightly better than forecasts of 0.3% and rose by an annualized 2.9%.