Pound Traders See No 2016 BOE Rate Increase Amid Low Oil Prices
- BOE has kept U.K. rate at record-low 0.5% since March 2009
- Sterling dropped to eight-month low versus dollar on Dec. 22
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Investors in the pound have waited more than six years for the Bank of England to raise interest rates and bolster the U.K. currency. With money markets signaling no move next year, it looks like they may have longer to wait.
The central bank has held its key rate at a record-low 0.5 percent since March 2009 and forward contracts based on the sterling overnight index average, or Sonia, aren’t fully pricing in a quarter-point rate increase until January 2017, data compiled by Bloomberg show. Speculation that rates will remain low as policy makers attempt to boost inflation is being underpinned by oil prices that dropped to an 11-year low this week, helping to push the pound to its lowest level versus the dollar since April.