On Thursday, the Bank of England raised its interest rate by 0.25% to 1% as inflation rose, marking the Bank of England’s fourth consecutive rate hike and the first of this. type since 1997.
Prior to the decision, the pound weakened against the dollar despite earlier expectations that the Bank of England would raise interest rates on Thursday, a day after the US Federal Reserve approved its largest rate hike. in 22 years old.
The pound fell 0.6% to $ 1.2561 by 0922 GMT, reversing Wednesday’s gains and retreating to its lowest level since July 2020, when it hit $ 1.2412 last week.
Against the euro, the pound fell 0.4% to 84.39 pence.
The pound has underperformed in recent weeks on expectations that the Bank of England may have to slow the pace of the squeeze as the central bank battles above-target inflation and a cost-of-living crisis affecting the country. ‘economic activity.
The pound also suffered from the strengthening dollar, reinforced by bets on a strong tightening by the Federal Reserve, and its appeal as a safe haven has given increasing uncertainty about the economic outlook.
On Wednesday, the Federal Reserve raised its benchmark interest rate by half a percentage point.
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