Pound jumps as Bank of England keeps UK interest rates on hold
Monetary Policy Committee voted by 8-1 to maintain rates at 0.5pc
The pound has climbed as the Bank of England kept interest rates unchanged, prompting speculation that the central bank may take a more careful approach in its measures to support the British economy after the nation’s vote to leave the European Union.
Sterling gained versus all but one of its 16 major peers, touching the highest level versus the dollar in two weeks, as minutes of the BOE meeting showed eight of the nine Monetary Policy Committee members voted to keep the official rate at a record-low 0.5 per cent, where it’s been since March 2009. Gertjan Vlieghe was the sole dissenter, saying the outlook justified an immediate reduction and calling for a 25 basis-point cut.
“Obviously the BOE has shown hesitation to ease monetary policy,” said Thu Lan Nguyen, a currency strategist at Commerzbank AG in Frankfurt. “So that can be taken as a signal to the market that” monetary easing from the Bank of England may be “not excessive.”
The pound rose 1.5 per cent to $1.3341 by 1.52pm London time, having earlier touched $1.3475, the highest since June 30. Sterling strengthened 1.1 per cent to 83.46 pence per euro.
The decision to hold rates helped extend the pound’s rally from a 31-year low versus the dollar. The currency gained this week as Theresa May prepared to take over as prime minister, ending a period of political uncertainty that has lasted since the referendum. It’s still 10 per cent lower since the nation opted for Brexit.