Pound sterling slips against dollar after Bank of England cuts its 2017 growth forecast

The Bank of England sent a mixed message on the future pace of interest rate rises and trimmed its 2017 growth forecast modestly

The pound slipped against the dollar and the euro (PA)

The pound slipped against the dollar and the euro on Thursday after the Bank of England sent a mixed message on the future pace of interest rate rises and trimmed its 2017 growth forecast modestly.

As Governor Mark Carney addressed journalists after announcing that the committee had decided to keep interest rates on hold as expected, the pound was trading around $1.288, down about 0.5 per cent on the day.

One member of the Monetary Policy Committee, Kristin Forbes, voted for an increase in rates in the last MPC meeting before the 8 June general election, but some analysts had expected her to be joined by another member, like Michael Saunders.

“Some pound positioning seems to have been based on a more hawkish Bank after chatter on the street that Saunders would vote for a hike after his speech in April and this has contributed to the sharp fall in [the pound],” said Neil Wilson, an analyst at ETX Capital.

The pound had hit a seven-month high against the dollar on Wednesday.

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In its quarterly Inflation Report, the Bank of England revised down its full-year growth forecast for 2017 to 1.9 per cent, from 2 per cent previously.

The Bank still sees the level of UK GDP in three years' time relative to before the Brexit vote lower by around 1.5 per cent of GDP, or around £30bn in today's money.