Investing.com - The pound fell to the day’s lows against the dollar on Thursday, retreating from seven-week highs after the Bank of England raised its forecasts for growth and inflation, but indicated that it is comfortable with record low interest rates.
GBP/USD fell 0.62% to 1.2583, after rising to highs of 1.2706 earlier, the most since December 14.
The BoE said it now expects economic growth of 2.0% this year, higher than economists had expected and up sharply from its previous forecast of 1.4%.
The economy is expected to grow 1.6% in 2018, compared with 1.5% forecast in November and the forecast for 2019 was raised to 1.7% from 1.6% previously.
"The upgraded outlook ... reflects the fiscal stimulus announced in the chancellor's Autumn Statement, firmer momentum in global activity, higher global equity prices and more supportive credit conditions," the bank said.
The bank said it expects inflation of 2.0% in the first quarter of 2017, 2.7% in early 2018 and 2.6% in early 2019, compared to November forecasts of 1.8%, 2.8% and 2.6%, respectively.
The BoE’s monetary policy committee voted 9-0 to keep rates on hold at 0.25% on Thursday, in line with forecasts.
Policymakers also agreed to leave the bank’s asset purchase program unchanged at £435 billion.
The BoE stuck to its view that it remained ready to move policy in either direction, depending on how things developed, reflecting the uncertain outlook for the economy.
Sterling was also sharply lower against the euro, with EUR/GBP climbing 0.87% to 0.8581.