Forexpros - The U.S. dollar remained broadly higher against the other major currencies on Wednesday, but the pound turned higher after Bank of England Governor Mervyn King said that cutting interest rates could be more counterproductive than beneficial. During European afternoon trade, the dollar was lower against the euro, with EUR/USD falling 0.42% to 1.2346. The euro’s losses were limited amid expectations that the European Central Bank will soon take steps to help lower Spanish and Italian borrowing costs after the bank indicated last week that it may restart its bond buying program. Overnight, ratings agency Standard and Poor’s revised the outlook for Greece to negative, from stable and warned that Athens was likely to miss the financial targets set by its international lenders, which would increase the likelihood of a default. Meanwhile, weak economic data out of Germany indicated that the effects of the long running debt crisis are continuing to take a toll on the region’s largest economy. German industrial production fell 0.9% in June, more than forecasts for a decline 0.8%, following an upwardly revised 1.7% gain in May. The greenback turned lower against the pound, with GBP/USD easing up 0.11% to 1.5637. Speaking following the release of the BoE’s quarterly inflation report earlier, Governor King stopped short of ruling out a rate cut in the coming months, but indicated that such a move was unlikely, saying it would damage some financial institutions. However, the outlook for sterling remained grim as BoE cut its forecasts for economic growth, saying the rate of growth in two years time was likely to be around 2% per year, significantly lower than its May forecast for growth of around 2.67%. The central bank said inflation would be just below 1.7% in two years, with broadly balanced risks of it being above or below 2%. Elsewhere, the greenback was lower against the yen, with USD/JPY retreating 0.29% to 78.37, but pushed higher against the Swiss franc, with USD/CHF rising 0.46% to 0.9731. In Switzerland, the State Secretariat for Economic Affairs said Wednesday that the consumer confidence index dropped to minus 17 for the April to July period, down from a reading of minus 8 points in the three months to April, amid growing pessimism over the economic outlook and unemployment. Analysts had expected the index to improve to a reading of minus 4. The greenback was broadly higher against its Canadian, Australian and New Zealand counterparts, with USD/CAD inching up 0.07% to 0.9976, AUD/USD slipping 0.13% to 1.0539 and NZD/USD falling 0.42% to 0.8126. The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.22% to 82.51. Later in the day, the U.S. was to release preliminary data on nonfarm productivity, followed by a government report on crude oil inventories.

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