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LONDON (Thomson Financial) - The dollar and pound remained weaker against other major currencies after a report from the International Monetary Fund slashed global economic growth forecasts, particularly for the United States and United Kingdom.

The IMF said losses from the subprime crisis would hit $945 billion, while economic growth this year will be only 0.5 percent in the United States and 1.6 percent in the United Kingdom.

The IMF’s new estimates reflect the fact that the United States and United Kingdom are among the most vulnerable to the ongoing credit turmoil, with falls in house prices and growth largely dependent on consumer spending and the financial sectors.

The dollar was also weighed by the release of the minutes to the Federal Reserve’s last policy meeting on March 18, when a 75 point cut was voted through with two dissenters.

‘The market considered the Fed minutes as dovish since some (Fed) members said the possibility of a prolonged and severe economic downturn could not be ruled out,’ said Antje Praefcke at Commerzbank.

This reminded investors that the Fed is likely to cut rates again on April 30, although the size is still a matter of speculation.

The pound, meanwhile, remained weak despite robust industrial production figures.

The recent depreciation in the pound helped manufacturing activity grow for a second month running, by 0.4 percent in February, beating analyst expectations for a more tame 0.1 percent gain.

However, experts believe a recovery in the industrial sector will not be sufficient to make up for the fall in consumer spending and house prices.

‘The better news on the UK’s industrial sector does little to offset the dire news on the housing market seen in recent days — the (Bank of England) is still odds on to cut interest rates tomorrow,’ said Paul Dales at Capital Economics.

The euro, meanwhile, has remained buoyant on expectations that the European Central Bank will not cut interest rates tomorrow, and that its President Jean-Claude Trichet will continue to sound alarm bells over inflation.

‘Trichet is likely to keep the door well shut on rate cuts for the foreseeable future,’ said Praefcke at Commerzbank.

However, the euro’s movements may be limited ahead of the upcoming G7 meeting in the United States this weekend.

‘Investors are unlikely to buy the euro ahead of the G7 meeting just in case statements were to be made on the strength of the euro,’ Praefcke said.

London 1115 GMT London 0815 GMT

U.S. dollar

yen 102.68 up from yen 102.36

Swiss franc 1.0140 up from Swiss franc 1.0129

Euro

U.S. dollar 1.5713 up from U.S. dollar 1.5708

yen 161.34 up from yen 160.78

Swiss franc 1.5941 up from Swiss franc 1.5927

pound 0.7982 down from pound 0.7984

Pound

U.S dollar 1.9687 up from U.S. dollar 1.9675

yen 202.20 up from yen 201.37

Swiss franc 1.9971 up from Swiss franc 1.9933

Australian dollar

U.S. dollar 0.9294 up from U.S. dollar 0.9274

pound 0.4721 up from pound 0.4713

yen 95.44 up from yen 94.90

carlo.piovano@thomson.com

cp/vlb

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