British Pound Slides as Bank of England Keeps Rate
British pounds fell against FX majors as markets reacted to the decision of the Bank of England to keep the policy rate unchanged. The UK central bank held rates today in a narrow decision, and that has led to some volatility in the pound.
GBPUSD fell to $1.305 as BoE voted 5–4 to keep its policy rate unchanged at 4%, noting that consumer price index is judged to have peaked.
Notably, four members voted to cut rates by 25 basis points to 3.75%, more than markets had anticipated. The BoE said that the risk of persistent inflation has diminished, while downside risks from weaker demand have become more apparent, leaving the overall outlook more balanced.
“if progress on disinflation continues, the Bank Rate is likely to follow a gradual downward path, though they emphasized that further evidence is needed before easing policy further”, BoE said.
Sterling traded quietly, even if choppily, in a mostly $1.3110-$1.3150 range yesterday and spent the session below last Friday’s settlement (slightly above $1.3150).
It has taken another lower today to reach about $1.3060, which it has not seen in seven months. Concerns about the budget announcement later this month appears to be taking a toll.
The 10-year US Treasury yield is off a little more than two basis points to slip below 4.09%. Gold is trading quietly inside yesterday’s range and off a little less than $10 in late European morning turnover.
BOE press conference
