Sterling Plunges to One-month Lows Versus Dollar After Dovish Outlook on BOE Rate-hike Path
Nov, 02nd 17:58
The British Pound plunged to the weakest level in nearly a month versus its American counterpart on Thursday after the Bank of England raised rates its key interest rate but also indicated that this rate hike would be the last for a while.
Sterling tumbled against most of its peers and dropped nearly 1.5 percent versus the U.S. dollar in North American trading session on Thursday, sending the pair GBPUSD to as low as $1.30500 – the lowest level since October 02nd. The currency pair looked set to record its biggest daily tumble in almost 21 weeks.
Led by Governor Mark Carney, the BOE’s Monetary Policy Committee voted 7-2 to raise the benchmark rate by 0.25 percent to 0.5 percent for the first time in 10 years given a surging inflation which sits at 3%, above the bank’s 2% target.
However, as British economic growth has slowed and the advance in consumer prices have not stemmed from strong demand, not to mention uncertainties over the process of leaving the EU, the central bank reiterated that any future interest-rate increases will be limited and gradual. The more dovish outlook than investors anticipated put pressure on the pound.
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