The pound advanced against its most major counterparts in the European session on Thursday, as the Bank of England left its benchmark interest rate unchanged for the second straight meeting and indicated that the rate will remain higher for an extended period.
The Monetary Policy Committee voted by a majority of 6-3 to maintain the Bank Rate at 5.25 percent.
The committee said monetary policy is likely to need to be restrictive for an extended period of time. “Further tightening in monetary policy would be required if there were evidence of more persistent inflationary pressures,” the bank said.
MPC members Megan Greene, Jonathan Haskel and Catherine Mann said an immediate increase in the interest rate was necessary to address the risks of more deeply embedded inflation persistence and bring inflation back to target sustainably in the medium term.
The economy is projected to grow only 0.1 percent in the fourth quarter, weaker than projected previously.
The bank forecast inflation to return to the 2 percent target by the end of 2025. Inflation is projected to fall below the target thereafter, as rising degree of economic slack was expected to reduce domestic inflationary pressures.
The pound appreciated to a 9-day high of 1.2225 against the greenback from yesterday’s close of 1.2151. The pound is seen facing resistance around the 1.24 level.
The pound rose to 1.1049 against the franc from Wednesday’s close of 1.1030. The pound is likely to face resistance around the 1.13 level.
The pound moved up to 183.70 against the yen, from a 2-day low of 182.72 seen at 3:55 am ET. The pair had finished Wednesday’s deals at 183.41. Should the pound strengthens further, it is likely to test resistance around the 185.00 level.
In contrast, the pound weakened against the euro, touching a 2-day low of 0.8733. At Wednesday’s close, the pair was worth 0.8698. Next near term support for the currency is seen around the 0.89 level.