At 12pm (AEDT), the Australian dollar was trading at $US0.6621/26, down a little over one US cent from yesterday's close of $US0.6728/33. During the morning, the local currency traded between a low of $US0.6622 and a high of $US0.6717.
By 12.42pm (AEDT), the Australian dollar had dropped to $US0.6588.
It touched $US0.6900 during the overnight session, but fell sharply after the BoE slashed official interest rates by 150 basis points, or 1.5 percentage points, to 3 per cent.
The local currency started the local session at 7am (AEDT) at $US0.6704/10 and continued to drift lower through the morning, as local and regional equity markets opened weaker.
The dollar also continued to decline against the Japanese yen - at 12pm (AEDT), the unit was trading at 64.31/37 yen, down from yesterday's close of 65.78/85 yen.
Societe Generale chief foreign exchange dealer Paul Milton said the BoE's decision was likely a catalyst for the Australian dollar to trade lower over the coming days.
"I think the writing is on the wall a little bit," Mr Milton said.
"I'm quite bearish around these levels for the Aussie."
Mr Milton said the BoE's decision was an indication of how worried officials are about the health of the global economy.
"The BoE going 150 basis points certainly sends a fairly stern warning to the market that the worst is definitely not over," Mr Milton said.
"They are sending out a fairly serious message that the global economy is in probably worse shape than people are thinking."
The International Monetary Fund has lowered its global growth forecasts and expected the US, Europe, the UK and Japan to slip into recession.
The dollar was expected to face further selling pressure this afternoon as Asian equity markets continued to trade in the red after the Dow Jones Industrial Average recorded its worst two-day decline since 1987.
Q&A: Interest rate cuts won’t have immediate impact
Dollar falls ahead of RBA rates call
HCA to conserve cash, pay debt with bonds
Dollar down US2c at noon
