Sterling Breaks Above 1.30 on Dollar Weakness

Sterling erased early losses to break above 1.30 on Thursday on broadbased dollar weakness, though gains were limited by Bank of England plans to ramp up bond purchases after cutting economic growth forecasts.

The British pound was up 0.3 at 1.3019 in early London trading after falling 0.2 in Asian trading. Against the euro, it strengthened marginally to 90.39 pence.

The Bank of England increased its already huge bondbuying stimulus on Thursday by a further 150 billion pounds as it sought to cushion Britains struggling economy against the hit from a second coronavirus lockdown.

The Bank said it expects Britains economy to shrink by 11 this year, compared with a 9.5 contraction forecast in August.

The pound lost ground overnight on media reports that the Bank of England is considering a move into negative interest rates.

The central bank kept rates unchanged on Thursday.

Reporting by Thyagaraju Adinarayan; Editing by David Goodman

Source Reuters

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