The Bank of England kept interest rates unchanged as predicted at 0.5 percent. Sterling plunged against its major counterparts despite having strengthened in the past 4 days in the build up to the BoE meeting today.
The 0.5% interest rate is a record low one and despite rising inflation in the United Kingdom, the majority of the BoE policy makers continue to view the British economy as too fragile to sustain higher rates at the moment. They are betting on oil prices to go down soon to ease prices, as they believe much of inflation is caused by the surge in oil prices due to the unrest in the Middle East and Libya and hope it is temporary.
The Pound lost 37 pips within seconds against the US Dollar from a high of 1.6344 down to 1.6307. EURGBP spiked 21 pips from a low of 0.8727 to a high of 0.8748. GBPJPY lost around 30 pips to drop to 138.54 from 138.85.