Pound Slumps Most Since 2011 as BOE Signals Rates to Stay Low
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The pound plunged the most in almost two years against the dollar after the Bank of England signaled it will keep interest rates at a record low for longer than investors had expected.
Gilts rose and short-sterling futures jumped, indicating traders were reducing bets on higher borrowing costs. Led by new Governor Mark Carney, the central bank kept its bond-buying target at 375 billion pounds ($565 billion) and issued a statement afterwards, signaling a move toward the forward-guidance tool he favors. Sterling has strengthened in the past month and gilt yields climbed after services, manufacturing and construction data indicated the economy is gathering pace.