Sterling posted its biggest daily loss in a month, as some investors consolidated positions after the Bank of England kept interest rates at record lows and lowered its growth and inflation forecasts.
Before Thursday’s central bank decision, sterling briefly rose to a 11-month high of $1.3267 per dollar, rounding off a strong 4.5 percent rise over the last six weeks.
Markets focused on the Bank of England’s lowering of its 2017 growth forecasts to 1.7 percent from 1.9 percent in May, as well as its unexpected reduction of its inflation projections. It now sees inflation at just under 2.6 percent in a year’s time after peaking around 3 percent in October.
Although most economists taking part in a poll had forecast a 6-2 vote to keep rates on hold, some had thought that chief economist Andy Haldane could join those calling for an immediate increase.