Economy

Sterling tumbles after Bank of England holds rates

Pound down 0.5% against euro

Bank of England governor Andrew Bailey arrives at the bank’s monetary policy committee meeting on Thursday. Photograph: Andy Rain/EPA

Thu Nov 4 2021 - 13:10

Sterling extended losses on Thursday, posting its biggest one-day drop against the dollar in more than six weeks, after the Bank of England squashed market expectations by holding interest rates steady. Against the euro, the pound was down 0.5 per cent to 85.26 pence.

Bond futures ticked higher and the main FTSE index was up 0.5 per cent after the decision, with bank shares predictably the biggest losers.

Seven of the central bank’s nine policymakers voted to hold off a rate rise for now, so they could see the how many people became unemployed following the recent end of the government’s job-protecting furlough scheme.

Biggest drop

Against the dollar, the pound fell briefly to the day’s low at $1.3547, down 1 per cent on the day, its biggest single day drop since end-September. It was down 0.2 per cent versus the dollar before the announcement.

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"Much was built into a hike today, my sense is a hawkish hold rhetoric will ensue and limit the current sell-off." said Neil Jones, head of FX sales at Mizuho Bank. – Reuters

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