2016.09.0710:40:00UTC+00Pound Extends Fall As BoE Carney Defends August Monetary Policy Action

The pound extended decline against its key counterparts in early New York deals on Wednesday, after the Bank of England Governor Mark Carney said that aggressive stimulus measures taken by the central bank in August helped the U.K. economy to withstand from the fallout of the Brexit vote, and the bank is ready to act and take whatever action when needed.

Speaking to the Treasury Select Committee, Carney told that the BoE stimulus package is helping to stabilise residential real estate prices and these measures would feed through the economy in due course.

The BoE Deputy Governor Jon Cunliffe sounded dovish and hinted at more policy action, if the economic downturn continues.

"If demand slows more significantly than expected, and the output gap is correspondingly larger, I would be willing to vote for further monetary stimulus," he told law makers.

In economic front, data from the mortgage lender Halifax showed that British house price inflation eased at a faster-than-expected pace in August to the lowest level in nearly three years. House prices climbed 6.9 percent in three months to August from last year after rising 8.4 percent in the three months ended July. Economists had expected the inflation to slow to 7.0 percent.

On a monthly basis, house prices edged down 0.2 percent from July, when it dropped by 1.1 percent. It was the second successive monthly fall. The expected decrease for the month was only 0.1 percent.

The pound has been trading in a negative territory in the European session, as data showed that U.K. manufacturing output dropped more-than-expected in July, in the aftermath of the U.K. vote to leave the European Union.

Data from the National Bureau of Statistics showed that U.K. manufacturing output contracted from June, falling 0.9 percent. Economists had forecast manufacturing to drop moderately by 0.3 percent.

The pound depreciated to 1.3350 against the greenback, from a high of 1.3438 hit at 5:00 pm ET. On the downside, the pound may challenge support around the 1.32 zone.

The pound fell to 6-day lows of 1.2927 against the Swiss franc and 135.40 against the yen, off its early highs of 1.3031 and 137.12, respectively. If the pound extends slide, 1.28 and 1.31 are likely seen as its next support levels against the franc and the yen, respectively.

The pound slipped to 0.8423 against the euro, its lowest since September 2. Continuation of the pound's downtrend may see it challenging support around the 0.86 region.

Data from Destatis showed that Germany's industrial production declined unexpectedly in July.

Industrial output declined 1.5 percent month-on-month in July, confounding expectations for an increase of 0.1 percent.

Looking ahead, at 2:00 pm ET, U.S. Federal Reserve is due to release the Beige Book report.