The pound has fallen below US$1.29 for the first time in almost a year on continuing worries Britain will leave the EU without a trade deal. Sterling also hit a nine-month low against the euro, and was down against the yen and Swiss franc.
Chancellor Philip Hammond has criticized claims from European Union officials that Britain has a “fantasy” approach to Brexit negotiations. Mr Hammond insisted that talks with EU officials were “constructive” after reports from the continent that Britain was being “unrealistic” and little progress made in discussions in recent days.
The Bank of England has backed off from raising interest rates as it slashed 2018 growth forecasts, but said the economy would bounce back from a weather-hit “soft patch”. Policymakers kept the prospect of rate hikes firmly on the cards, although it sparked confusion over when the next increase may come.
The Bank of England is likely to raise interest rates twice this year and twice in 2019, despite a sluggish economy, says a forecasting body. Bank governor Mark Carney has said a rate rise is “likely” this year, but any increases will be gradual.
The pound has continued its recent strong run against the dollar pushing firmly above US$ 1.43. It is the seventh session in a row that the pound has made gains against the US currency. The strong run means that, among the G10 group of rich nations, the UK has the best-performing currency this year.
The Bank of England has raised interest rates for the first time in a decade to contain an increase in inflation stoked by the Brexit vote, in what is otherwise a moment of high uncertainty for the economy. In a statement Thursday, the bank said it had lifted its benchmark rate, which affects the cost of loans and savings rates in the wider economy, to 0.50% from the record low of 0.25%.
Bank of England is expected to reverse emergency action taken following the Brexit referendum, when it cut rates from 0.5% to 0.25% to avert a recession. While a slump has not materialized, the British economy appears in worse health than most other major countries, with potential to be blown further off course by faltering talks to leave the EU.
The Bank of England (BOE) held interest rates at the record low level of 0.25% and maintained asset purchases at £435 billion on Thursday. The decision, which was made by an 8-1 majority, had been almost unanimously anticipated by central bank watchers with many expecting the BOE to choose caution until more clarity emerges on the Brexit process and the U.K. economy's capacity to manage outside of the European Union.
The Bank of England voted unanimously on Thursday to keep the UK's main interest rate at a record low of 0.25%, and anticipated that the next rate move could be in either direction. The last change was a rate cut in August, in the wake of the UK's vote to leave the EU.
The Bank of England has raised its near-term growth and inflation forecasts on Thursday following the slide in sterling seen since the U.K.'s decision to leave the European Union. The bank decided Thursday to keep interest rates at the record low level of 0.25% and maintan its quantitative easing (QE) purchase targets at up to £10 billion for corporate bonds and £435 billion for U.K. government bonds.