Sterling and UK Yields Drop as BoE Lowers Growth Forecasts

The pound slid from an 11-month high versus the dollar and U.K. government bonds rallied after the Bank of England voted to keep interest rates unchanged, while also cutting the country’s economic growth forecast.

Sterling dropped to its weakest level versus the euro this year as money markets showed traders pushed back expectations for a rate hike to November 2018 from August 2018 prior to the decision. The BOE’s Monetary Policy Committee voted 6-2 in favor of keeping rates unchanged at a record-low 0.25 percent. The central bank lowered its economic growth projections to 1.7 percent this year from 1.9 percent.

“The drop in sterling may suggest that some investors were betting on a surprise hawkishness from the meeting,” said Credit Agricole SA strategist Valentin Marinov in emailed comments. “The markets will continue to bet on a hike in 2H18, which could leave GBP back at square one.”

Bloomberg

USD/JPY – Yen Dips as US Jobless Claims Beats Estimate

EUR/USD – Euro Inches Lower on Mixed Services PMIs

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.