The pound has tumbled against both the euro and the dollar this morning following the Bank of England’s decision to keep interest rates unchanged.
Sterling fell by almost 1.0% against the euro yesterday, the largest decline in a single day since late September.
Only two members of the Bank’s Monetary Policy Committee (MPC) voted in favour of an interest rate hike, with seven voting against, including Governor Andrew Bailey.
There was previously a strong expectation of a November rate hike, with several members of the MPC suggesting this. Markets were therefore disappointed, and slightly caught out, by the decision, with many investors saying the Bank has lost some credibility.
The BoE has said that it did note hike rates yesterday due to uncertainty around the end of the furlough scheme in September but will not rule out a rate rise at its December meeting.
