2009.01.0801:09:00UTC+00Pound Weakens Against Majors, BoE Rate Decision In Focus

During early deals on Thursday, the pound edged down against its major counterparts on expectation that the Bank of England will cut interest rates today.

The Bank of England is scheduled to announce its interest rate decision at 7:00 am ET. Economists are expecting the central bank to lower the key interest rate by 50 basis points to 1.5%. In December, the central bank had slashed its interest rate by 100 bps to 2%, the lowest level last seen in October 1939.

Against the euro, the pound slipped to 0.9066 in early deals on Thursday. This may be compared to Wednesday's close of 0.9036. On the downside, 0.917 is seen as the next target level for the UK currency.

In early trading on Thursday, the pound weakened against the currencies of Japan and Switzerland. Currently, the pound is worth 139.18 against the yen and 1.6587 against the franc, down from yesterday's close of 139.97 and 1.6642, respectively. If the pound falls further, it may likely target 138 against the yen and 1.634 against the franc.

The pound, which closed yesterday's trading at 1.5112 against the dollar declined to 1.5034 during early deals on Thursday. The next downside target level for the pound-dollar pair is seen at 1.487.

Before the BoE meeting, investors will have a busy European session, in which the Swiss December CPI and unemployment rate, German November trade balance and factory orders, Euro-zone final third quarter GDP, unemployment rate for November and the consumer confidence report for December have been slated for release.

Across the Atlantic, the US weekly jobless claims report is due in the New York morning. The Federal Reserve is expected to release its monthly consumer credit report at 3 pm ET. Consumer credit for November is likely to show an increase of $0.5 billion. In October, consumer credit fell by $3.6 billion or 1.6% to $2.58 trillion, with revolving and non-revolving credit declining by $0.2 billion and $3.4 billion, respectively.

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