2016.09.1606:24:00UTC+00Pound Slides On BoE Rate Cut Warning

The pound fell against its major counterparts in early European deals on Friday, as investors pondered over the possibility of another interest-rate cut by the Bank of England this year, if the U.K. economic outlook did not improve in the aftermath of the Brexit vote.

The Bank of England on Thursday signaled about the possibility of another rate cut in November, if its longer-term view of the economy remained unchanged from August inflation report projection.

The MPC retained its key bank rate at a record low of 0.25 percent, the government bond purchases at GBP 435 billion, and corporate bond purchases at GBP 10 billion, in line with economists' expectations.

The next policy session is scheduled for November, when economists expect the bank to reduce to the interest rate to 0.10 percent.

The currency was also weighed by rising risk aversion, as banks across Europe plummeted deep into the red on concerns about Deutsche Bank's fragile finances.

Crude oil prices fell on concerns about a global supply glut and investors remained cautious ahead of next week's FOMC and BOJ meetings.

The pound was modestly higher against its major opponents, except the yen, in the Asian session.

The pound dropped to 1.3191 against the greenback, compared to Thursday's closing value of 1.3237. If the pound-greenback pair extends decline, 1.30 is likely seen as its next support level.

The pound edged down to 1.2834 against the Swiss franc, and held steady thereafter. At Thursday's close, the pair was valued at 1.2861.

The pound declined to 134.44 against the Japanese yen, its lowest since August 30. Continuation of the pound's downtrend may see it challenging support around the 132.5 mark.

Reversing from an early high of 0.8486 against the euro, the pound weakened to 0.8515. The pound is seen finding support around the 0.87 region.

Data from Eurostat showed that Eurozone hourly labor cost grew at a slower pace in the second quarter.

Hourly labor costs increased 1 percent year-on-year, slower than the 1.6 percent growth registered a quarter ago.

Looking ahead, U.S. CPI data for August, the University of Michigan's final consumer confidence index for September and U.S. Baker Hughes rig count data are due for release in the New York session.