POUND LIVE: Pound at 10-month low against euro in blow for holidaymakers
THE pound is at its lowest level against the euro since last October, eroding the spending power of British holidaymakers heading to the continent during the school holidays.
Sterling sank to 1.1075 against the eurozone currency after the Bank of England appeared to rule out an interest rate hike in 2017.
Holidaymakers now face getting little more than one euro for every pound exchanged.
Only two of eight Monetary Policy Committee (MPC) members at the Bank voted for rates to rise from 0.25 per cent to 0.5 per cent.
Governor Mark Carney said interest rates are now expected to rise in 2018.
Policymakers also downgraded UK growth in 2017 in the Bank's quarterly inflation report, which knocked the pound further.
Britain's economy is set to expand by 1.7 per cent this year, compared to a previous forecast of 1.9 per cent, according to the Bank's latest predictions.
Wage growth was also been revised down in the gloomy update from the Bank.
FXTM Research Analyst Lukman Otunuga said: "The unsavory combination of uninspiring UK economic data in July and uncertainty surrounding Brexit talks, has pressured BoE hawks and dented expectations of a rate hike occurring anytime soon.
"With the central bank downgrading its UK GDP growth forecast for both this year and 2018, Sterling is poised for further punishment down the road.
"With political uncertainty, soft economic fundamentals and ongoing Brexit concerns weighing heavily on the UK economy, investors may start to question whether the BoE moves forward with raising rates in 2018.
"The sharp depreciation of the British Pound following the interest rate decision continues to highlight how the currency has become increasingly reactive to monetary policy speculations."
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The pound also dipped against the dollar, following the Bank of England update.
However, sterling remains above 1.31 against the American currency, which is coming under pressure from the investigation into President Donald Trump's relationship with Russia.
Michael Hewson, chief market analyst at CMC Markets UK, said: "The US dollar has also remained under pressure, on reports that a grand jury is being convened by US special counsel Robert Mueller to look into the allegations of Russian interference in the US election.
"The mere fact that this is being talked about in such terms would suggest that the evidence is there and is waiting to be found."
More to follow...