(RTTNews) - U.K.'s sterling showed mixed performance on Thursday morning, hitting a fresh multi-month high against the US dollar while falling to a 9-day low against the euro as traders are awaiting the interest rate decision by the Bank of England, which is due out at 8:00 am ET.
At the end of November meeting, the nine-member Monetary Policy Committee is set to leave the Bank Rate unchanged at 0.5%. This is the lowest since the central bank was established in 1694. Economists expect the Central Bank to retain the rate at its historic low well into 2011.
Further, the Bank of England is likely to maintain the size of quantitative easing at the current GBP 200 billion level as British economic growth slowed much less than anticipated in the third quarter.
Economists expect another tranche of QE only in the beginning of the next year. The quantitative easing programme was first introduced on March 5, 2009 with GBP 75 billion, which was raised stage by stage to the current level. The last change in the programme was an increase of GBP 25 billion on November 2009.
In economic news, U.K. house prices rose 1.8% in October from the previous month, Lloyds Banking Group Plc's Halifax division showed today. Economists had expected house prices to rise 0.6% after declining sharply in September.
The pound reached a fresh 9-month peak of above 1.62 against the US dollar before reversing direction around 6:40 am ET as investors dumped the dollar after the Federal Reserve announced the fresh stimulus in an effort to jump start the floundering US economy.
The Fed pledged to buy $600 billion more in government bonds by the middle of next year. The move was widely expected and was mostly priced in already.
The Fed also decided to leave interest rates unchanged at a record low.
The Fed's announcement to buy government debt came a day after frustrated Americans handed out a stunning defeat for the Democrats in the mid-term elections.
The pound eased after testing yesterday's fresh multi-week high against the Japanese yen in early trading on Thursday. The pound that reached as high as 131.21 against the yen around 6:40 am ET reversed its course shortly and is presently quoted at 130.80.
The pound plunged to a 9-day low of 0.8820 against the euro around 7:25 pm ET. The euro-pound pair is presently worth 0.8807 with 0.8850 seen as the next likely target level.
The final services PMI reports for October from the major European economies, which were released today likely influenced the euro.
The pound also showed some weakness against the Swiss franc in early trading, hitting as low as 1.5627 before moving sideways around 7:00 am ET. The pound-franc pair is presently worth 1.5640 with 1.5610 seen as the next likely target level.
