Sterling rises after narrow BoE rate cut decision
The British pound strengthened on Thursday after the Bank of England (BoE) delivered a cautious interest rate cut in a closely divided vote, signalling limited room for further monetary easing.
The BoE’s Monetary Policy Committee voted 5–4 to cut its key interest rate by 25 basis points to 3.75%, marking the fourth rate cut this year. However, policymakers stressed that future reductions would be gradual, reflecting ongoing uncertainty over inflation and economic conditions, News.Az reports, citing Reuters.
Sterling, which had fallen earlier in the day, reversed course following the announcement. The pound rose 0.1% against the U.S. dollar to $1.3381 and gained 0.2% versus the euro to 87.56 pence.
Governor Andrew Bailey backed the rate cut, shifting the balance of the committee after previously voting to hold rates steady. He said interest rates remain on a downward path but warned that each additional cut would require increasingly careful consideration.
Financial markets scaled back expectations for further easing, with traders now pricing in the next rate cut no earlier than June 2026, compared with earlier forecasts pointing to April. UK government bond yields also rose, reflecting the more cautious policy outlook.
The BoE’s decision followed data showing UK inflation eased to 3.2% in November, its lowest level since March, reinforcing expectations that the pace of rate cuts will slow as policymakers assess lingering price pressures.
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