FX.co ★ Sterling Slides as BoE Turns More Dovish

The British pound experienced a decline of 0.7%, falling below $1.36, marking its weakest point since January 22. This drop followed the Bank of England's decision to maintain interest rates at 3.75%, adopting a more dovish stance than expected by the market. Although the decision to hold rates was largely anticipated, the voting outcome caught investors off guard. The Monetary Policy Committee (MPC) narrowly voted 5–4 to keep rates unchanged, with four members advocating for an immediate 25 basis point reduction to 3.5%. These members argued that Consumer Price Index (CPI) inflation is anticipated to return towards the 2% target beginning in April. The Bank acknowledged that risks associated with persistent inflation have continued to decrease, while concerns related to weaker demand and a loosening labor market have gained prominence. Additionally, the pound faced pressure due to rising political uncertainty. Questions have surfaced regarding the stability of Prime Minister Keir Starmer’s leadership, following his appointment of Peter Mandelson as the UK ambassador to the United States. This move has elicited scrutiny due to Mandelson's previous associations with Jeffrey Epstein.