Pound May Be Edging Toward ‘Tipping Point,’ Bank of Tokyo Says

By Daniel Tilles

Aug. 7 (Bloomberg) -- The pound may weaken after the Bank of England unexpectedly increased its asset-purchase plan yesterday, Bank of Tokyo-Mitsubishi UFJ Ltd. said.

“Yesterday’s BOE actions have raised the downside risks to the pound as it is likely to raise foreign-investor concerns over the BOE’s policy credibility similar to the Fed, edging the pound closer to an eventual tipping point,” Lee Hardman, a currency economist at the bank in London, wrote today in a report. “The U.K. needs a weak pound more than ever. In these circumstances, we believe that pound-dollar levels above $1.70 will prove unsustainable.”

Sterling fell 0.3 percent to $1.6727 as of 10:44 a.m. in London.

To contact the reporter on this story: Daniel Tilles in London at dtilles@bloomberg.net