The pound fell against the dollar on Wednesday after the Bank of England cut its inflation forecasts, which cast doubts on the strengthen of the country’s recovery.
The pound came under pressure after the Bank of England reported earlier inflation will likely remain below its 2% target in the near term and fall below 1% at some point during the next six months. The bank said it now expects inflation to take three years to return to its 2% target.
The bank said the outlook for inflation had weakened due to steep declines in commodity prices and the sluggish outlook for global growth.The annual rate of U.K. inflation fell to a five-year low of 1.2% in September.
“When Bank Rate does begin to rise, the pace of rate increases is expected to be gradual, with rates probably remaining below average historical levels for some time,” the BoE said. The bank said it continued to expect economic growth of 3.5% this year but pared its forecast for growth in 2015 to 2.9% from 3.1% in August.
Intraday bias remains on the downside as 21 and 55 EMA are crossed downward. Also SSRC, MACD and RSI are showing bearish momentum is intact and am expecting more decline to 1.57113 supports.