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Pound surges after BOE skips rate cut

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The pound surged Thursday after the Bank of England unexpectedly left interest rates unchanged following the Brexit vote but signaled a rate cut could come at its August meeting.

[NEW YORK] The pound surged Thursday after the Bank of England unexpectedly left interest rates unchanged following the Brexit vote but signaled a rate cut could come at its August meeting.

"Sterling's reaction today to BOE is a classic example of misplaced expectations," said Kathy Lien of BK Asset Management.

"Economists were calling for a cut, investors believed them and when the BOE kept policy unchanged, sterling jumped from US$1.3250 to US$1.3475," she said.

"However the rally faded as the day progressed because the main takeaway from BoE is simple - rates will be lowered in three weeks."

The pound ended the day up 1.5 per cent against the US dollar at US$1.3344. Against the euro, sterling was up 1.2 per cent at 83.31 pence.

The Japanese currency weakened 0.9 per cent against the US dollar on continued speculation that the Bank of Japan is poised to ramp up stimulus at its July 28-29 monetary policy meeting.

AFP

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