Pound slides against Singdollar after Bank of England’s aggressive stimulus

Sterling was down 1.59 percent at $1.3110 and on track for the largest one-day fall against the dollar in a month.

BRITISH RATES: The Bank of England cut interest rates to new lows, its first reduction since the 2008 financial crisis, to offset the shock of Britain’s June vote to leave the European Union. Those estimates are up from prior forecasts for 0.4%, 1.5% and 2.1%, respectively.

On Thursday, the Bank’s governor Mark Carney, said lenders had “no excuse” not to pass on the rate cut to households, creating a flurry of reaction from a handful of banks.

The bank forecast that Britain would avoid recession but Carney warned of a significant slowdown, unemployment rising to 5.5 percent from 5 percent and falling house prices over the next year.

Ross Norman, chief executive officer at London-based commodities broker Sharps Pixley. said precious metals should benefit from concerns about the European banking sector, and fresh round of stimulus measures by the BOE and Bank of Japan to boost flagging economies, raise concerns about global economic health.

In initial trade, London’s FTSE 100 index rose 0.4 percent to 6,764.35 points, after the BoE halved rates on Thursday to a record-low 0.25 percent.

However, Scott Corfe, director of the Centre for Economics and Business Research, said: “Even with this stimulus, CEBR expects economic growth to slow from about 1.5% this year to less than 0.5% in 2017”.

The Bank of England deputy governor, Ben Broadbent, has told the BBC’s Today programme there could be a further interest rate cut this year if needed.

With a £60 billion government bond buying program and a new initiative to buy £10 billion of corporate bonds, the Bank of England hope to support the necessary adjustments in the United Kingdom economy following Brexit.

A report by a payrolls processor ADP showed on Wednesday U.S. private employers added 179,000 jobs in July, a tad above market expectations and bolstering hopes that Friday’s data could show moderate growth in the employment.

Benchmark 10-year USA yields hit their lowest level in three days of 1.484 per cent.

Ahead of Friday’s U.S.jobs report, fed fund futures have priced in a 12 percent chance the Fed will hike rates at its policy meeting next month, unchanged from Wednesday, according to the CME’s FedWatch tool.

The rate cut was widely expected but not the other measures.

London dipped 0.1 percent in tentative morning deals as investors waited on whether the BoE will unveil a quarter-point reduction to combat the economic impact of Britain’s shock European Union exit vote.

“Many investors are indeed piling into gold as a hedge against their incremental stock purchases and growing low-quality bond portfolios, and that hedge has worked out well this year, and it will likely continue to in the near term”, said RBC Capital Markets in a report. The dollar inched up to 101.19 yen from 101.13 yen and the euro dipped to $1.1132 from $1.1145.

Brent crude, a benchmark for worldwide oil prices, added 1.19 dollars (90p), or 2.8%, to 44.29 dollars (£33.79) a barrel in London.

The Aussie climbed 0.25% to $0.7649, and Australian shares added 0.5%.