Bank of England Hikes Rates, Triggers Sell-Off in the British Pound

The British pound slid on Thursday after members of the Bank of England’s Monetary Policy Committee voted 9-0 to raise interest rates by 25 basis points to 0.75%.

This is only the second time the BoE has voted to raise the benchmark rate since the global financial crisis.

Although the rate hike was expected by most analysts and market participants, the unanonymous vote was not priced into the currency markets.

Selling pressure on the pound increased substantially following the release of BoE’s Inflation Report - released after the decision - which states that British businesses are still most concerned about the potential fallout from a bad Brexit deal:
“But respondents to the 2018 Q2 Deloitte CFO Survey again ranked Brexit as the top risk facing their businesses, and three quarters of respondents expected Brexit to lead to a deterioration in the business environment in the long term, the highest proportion since the referendum.”
Following the report, the pound sold-off more than 0.50% against the U.S. dollar, hitting at an 11-day low at 1.3126.

Ar press time, the GBP/USD currency pair is only about 0.57% away from breaking the 2018 lows at 1.2957, recorded on July 19.