Sterling falls on UK growth downgrade

Sterling fell against the dollar and the euro after the Bank of England downgraded its economic growth forecast for 2011.

In February's Quarterly Inflation report, the Bank said growth this year will be weaker than previously estimated but reassured a double-dip recession was unlikely. It confirmed inflation is expected to soar close to 5% before falling to around the 2% target in 2012, but only if interest rates rise in line with market expectations from Q2 this year. The pound fell after the release of the report, dropping more than 0.3% against the dollar to $1.6085. Meanwhile, the euro rose to a session high of 84.18p, up from 83.85p before the report. The yield on the UK 10-year government bond w...