Pound Sterling breaks above $1.30 on dollar weakness

LONDON (Reuters) – Sterling erased early losses to break above $1.30 on Thursday on broad-based dollar weakness, though gains were limited by Bank of England plans to ramp up bond purchases after cutting economic growth forecasts.

The British pound was up 0.3% at $1.3019 in early London trading after falling 0.2% in Asian trading. Against the euro, it strengthened marginally to 90.39 pence.

The Bank of England increased its already huge bond-buying stimulus on Thursday by a further 150 billion pounds as it sought to cushion Britain’s struggling economy against the hit from a second coronavirus lockdown.

The Bank said it expects Britain’s economy to shrink by 11% this year, compared with a 9.5% contraction forecast in August.

The pound lost ground overnight on media reports that the Bank of England is considering a move into negative interest rates.

The central bank kept rates unchanged on Thursday.

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