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Pound Slides as BOE’s Recession Warning Seen Limiting Rate Hikes

  • Sterling reverses gains against the US dollar, UK bonds rally
  • Gilt yield curve briefly inverts to reflect fears of slowdown
Updated on

The pound slumped and UK bonds rallied after the Bank of England warned of a long recession as it delivered its biggest interest-rate hike since 1995.

The BOE’s grim economic outlook took the shine off a widely expected 50 basis-point interest-rate hike for pound investors. The currency fell as much as 0.7% to $1.2066, after policy makers raised interest rates to 1.75%.