Investing.com - The pound was slightly lower against the dollar on Tuesday after testimony by Bank of England officials to parliament’s Treasury Committee reiterated the dovish tone of its inflation report from earlier this month.
GBP/USD was down 0.24% to 1.5668, not far from last week’s 14-month trough of 1.5588.
Sterling remained on the back foot after BoE Governor Mark Carney said the U.K. economy faces heightened risks from geopolitical tensions and slowing global growth, noting that economic conditions have deteriorated in the euro zone and Japan in recent months.
Carney reiterated that it is “more likely than not” than U.K. inflation will fall below 1% in the next few months. However the central bank expects inflation will move back towards its 2% target in the medium term, as wage increases pick up.
The BoE head also reiterated that when rates do start to increase they will do so in a gradual and limited way.
Markets scaled back expectations for a rate hike by the BoE after the bank’s November 12 inflation report warned that downside risks to inflation remain and added that the rate of economic growth in 2015 is likely to be slower than this year.
The pound was almost unchanged against the euro, with EUR/GBP at 0.7926.
In the euro zone, data on Tuesday confirmed that Germany narrowly avoided a recession in the third quarter, posting economic growth of 0.1%. Consumer spending rose by 0.7%, while exports were 1.9% higher.
The Organization for Economic Co-operation and Development warned Tuesday that the euro area is at risk of deflation if growth stagnates or if inflation expectations continue to deteriorate.
It repeated its call for the European Central Bank to embark on quantitative easing measures to spur growth in the region.