Pound Tumbles, Gilts Advance After BOE’s ‘Dovish’ Hike
- Currency falls 1.8% vs dollar, five-year bonds lead gains
- Sterling could extend losses, Credit Agricole’s Marinov says
This article is for subscribers only.
The pound posted its worst day versus the dollar in six weeks, while UK government bonds rallied after the Bank of England slowed the pace of monetary tightening, which investors took as a sign that interest rates may peak at a lower level than expected.
Cable fell as much as 1.8% to $1.2430 after the BOE raised interest rates by 50 basis points, while the five-year gilt yield slipped as much as 11 basis points to 3.19%. Analysts noted however, that two members of the Monetary Policy Committee had voted against the hike, preferring to keep rates unchanged following an unprecedented 75-basis point hike in November.