Pound Stays Lower Versus Euro After BOE Leaves Rates Unchanged

  • BOE maintains status quo as inflation, growth outlook weakens
  • MPC votes 8-1 to keep rates at record-low 0.5 percent

The pound stayed lower against the euro after the Bank of England officials kept rates at a record low in their first policy decision of 2016.

Sterling was little changed against the dollar after the decision where policy makers cited a darkening growth and inflation outlook for the U.K. The drop in oil prices and the chaotic start to the year has caused traders to delay calls for when the central bank will raise rates into 2017. Eight of the nine members of the Monetary Policy Committee said keeping the key interest rate at a record-low 0.5 percent for now would “best balance the risks” to the economy and inflation.

“I don’t see the pound getting support in a more risk-averse environment that we are stuck in,” said Simon Smith, research director at FXPro Group Ltd. in London. “On that basis, I can still see it underperforming the dollar and the euro.”

The pound depreciated 0.2 percent to 75.61 pence per euro as of 12:37 p.m. London time, having earlier reached 76.07 pence, the weakest level since January 2015. Sterling was at $1.4405.

Yields on benchmark 10-year gilts fell two basis points, or 0.02 percentage point, to 1.72 percent. having touched 1.68 percent earlier, the lowest since October. The 2 percent security due September 2025 climbed 0.185, or 1.85 pounds per 1,000-pound face amount, to 102.475.

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