Sterling jumps, FTSE falls following BoE holding rates

UK-Currency-Money-Coin-Pounds-GBP-700x450Sterling has jumped against the dollar, while the FTSE 100 initially fell following the Bank of England’s surprise decision to hold interest rates.

Following the announcement that interest rates were maintained at 0.5 per cent, sterling rose 2.7 per cent against the dollar, to reach $1.347, before dropping back to a 1.5 per cent gain on the day at $1.33.

The FTSE 100 initially fell from 6731.92 to 6651.03, but has now rebounded, being flat on the day’s trading.

The FTSE 250 saw a similar reaction, falling initially but now being marginally up, by 0.14 per cent on the day.

Gilt yields also reacted to the news, with the yield on the 10-year gilt rising 5 basis points to 0.8 per cent amid a selloff in the UK debt.

Nigel Green, founder and chief executive of deVere Group, says: “Sterling jumped to two-week high and the UK’s blue chip index, the FTSE 100, retreats following the Bank of England’s unexpected decision today to keeps interest rates on hold for now.

“This follows the FTSE leaping up almost a full percentage point yesterday to reach a new 11-month high as Britain prepared to appoint Theresa May as David Cameron’s successor as prime minister. This illustrates the current level of volatility in financial markets in the post Brexit vote era.”