The British pound slipped to a four-week low against the dollar on Wednesday morning after investors were left disappointed following the Bank of England's (BoE) inflation report.
The U.K. central bank left its growth and inflation forecasts broadly unchanged, meaning a rise of its main benchmark rate is still expected in the first half of 2015. This surprised markets and a recent run-up in the currency quickly reversed after the release. Sterling fell to $1.6757 after trading higher for much of the session and peaking at $1.6874.
BoE Governor Mark Carney played down expectations of an earlier-than-expected rise in interest rates at a press conference following the report. He said that a hike would depend on the degree of slack in the U.K. economy, and the prospects for its absorption.
"Carney left those expecting an early rate hike from the Bank of England a little disappointed," Alex Edwards, the head of the corporate desk at UKForex, said in a research note.
"GBP/USD has been sold off, but the Bank haven't signaled any major discomfort with the high value of the GBP/USD exchange rate. In our view, it means this might present opportunities to buy GBP/USD, especially if we continue to see upside surprises to U.K. economic data over coming months."