The pound fell to its lowest level against the dollar in three months in early trading today.
It was trading at $1.6011 this morning, its lowest level since early April, down 0.3 per cent since yesterday. Wednesday also saw a 1 per cent fall.
This followed the release of the minutes from the Bank of England’s Monetary Policy Committee that showed a further round of quantitative easing (QE) may be necessary in the UK to prop up a sluggish economy.
In contrast, the US Federal Reserve said yesterday that it plans to end its QE programme this month, while offering no suggestion that it intends a fresh stimulus effort.
However, the pound continues to strengthen against the euro, with the euro slipping 0.3 per cent to 89.07 pence with the Greek crisis putting pressure on the euro.
The impact of a stronger dollar was felt by crude oil futures that fell on early trading today. The August contract on the New York Mercantile Exchange was down $2.35 to $93.06 a barrel ahead of New York trading. The front-month August Brent crude contract was down $3.25 to $110.96 a barrel.
Yesterday, the US Federal Reserve downgraded its growth target saying that the American economy would grow by 2.7 to 2.9 per cent in 2011, down from its previous estimate of 3.1 to 3.3 per cent.
While the preliminary HSBC Chinese Manufacturing Purchasing Managers Index, which is a gauge of nationwide manufacturing activity, fell on Thursday to an 11-month low of 50.1 in June from a final reading of 51.6 in May, sparking fears of a significant slowdown in the Chinese economy.