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Forex News: Pound Weakens After BoE Decision

Pound Weakens After BoE Decision

06/16/2022 - 08:49:00 (RTTNews)

(RTTNews) - The pound slipped against its most major counterparts in the European session on Thursday, after the Bank of England raised its key interest rate by 25 basis points, as expected.

The Monetary Policy Committee, led by Governor Andrew Bailey, voted 6-3 to raise the bank rate by 25 basis points to 1.25 percent, the highest rate since early 2009.

The majority of members observed that labor market remained tight and indications of broader domestic inflationary pressure required a response in order to ensure inflation returned sustainably to the target in the medium term.

Jonathan Haskel, Catherine Mann and Michael Saunders preferred a 0.5 percentage point increase to 1.50 percent. They said faster policy tightening now would help to bring inflation back to the target sustainably in the medium term, and reduce the risks of a more extended and costly tightening cycle later.

"The scale, pace and timing of any further increases in Bank Rate will reflect the Committee's assessment of the economic outlook and inflationary pressures," the bank said.

The pound touched near a 3-week low of 159.99 against the yen, from a 2-day high of 163.80 seen at 9 pm ET. Should the pound falls further, it is likely to test support around the 155.00 region.

The pound remained lower against the franc, at a 1-1/2-year low of 1.1802. At Wednesday's close, the pair was worth 1.2088.

The Swiss National Bank raised its key interest rate unexpectedly to combat inflationary pressures.

The bank raised the policy rate and the interest rate on sight deposits at the SNB by half a percentage point to -0.25 percent from -0.75 percent.

The pound reached as low as 1.2041 against the greenback. The pair had finished Wednesday's deals at 1.2176. The pound is seen finding support around the 1.19 area.

The pound, however, rebounded from the BoE-led drop against the euro, with the pair trading at a 3-day high of 0.8540. The pound may find resistance around the 0.82 level.

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