The pound exhibited erratic movements after the announcement of interest rates by the Bank of England (BOE) raising interest rates at its latest policy meeting.
The BOE met the market forecast by raising the rate by 25 basis points to 0.75%. This is the third increase by the central bank in the fight against the UK’s high inflation spike.
However, the pound's initial reaction saw the currency plunge drastically after the announcement following some policymakers in favor of keeping interest rates.
Straying from investor expectations for a unanimous decision, Deputy Governor Jon Cunliffe chose to keep rates up by warning of a big impact on demand from higher commodity prices.
This indirectly indicates that BOE policymakers are willing to slow down tightening. Policymakers also said they continue to expect increases in May before a ‘long break’ until 2023.
Despite the decline, the pound later rebounded after investors scrutinized the BOE statement, rebounding against the US dollar.
Meanwhile, the currency king rose slightly in the Asian session after falling to a one -week low. The depreciation of the US dollar has given most other major currencies a chance to rise.
The Aussie and New Zealand dollars are among the currencies that performed best in addition to being supported by positive Australian and New Zealand economic data.
