Sterling declines 1% following Bank of England's decision

Sterling lost ground against most major rivals on Thursday following Bank of England's policy decisions. 

More Hikes

Bank of England raised interest rates by 25 basis points to 15-year highs as expected to combat stubbornly high inflation. 

Seven members of the BoE Board agreed to the rate hike this week, while two members supported no change in policies. 

With the decision, interest rates rose from 4.25% to 4.50% to combat inflation, with UK interest rates reaching October 2008 levels. 

On trading, GBP/USD fell 0.1% to 1.2505 as of 18:57 GMT. 

The Dollar

The dollar index rose 0.6% as of 18:53 GMT to 102.06, with a session-high at 102.1, and a low at 102.3. 

Recent US data showed a slowdown in US producer prices, similar to the slowdown in US consumer prices in March.

US consumer prices rose just 4.9% in April, the lowest such reading since May 2021, and below estimates of 5%.

Core prices, excluding food and energy, rose 5.5% y/y last month, matching estimates and down from 5.6% in the previous reading.

US unemployment claims rose to 264 thousand in the week ending May 6, above estimates of 245 thousand, and up from 242 thousand in the week ending April 26.

As for consumer prices, they rose 4.9% m/m in March, the lowest in exactly two years.  

Core consumer prices rose 5.5%, also slowing down from 5.6% in the previous reading.

Loonie

Canadian dollar fell 0.9% against US dollar as of 18:58 GMT to 0.7410.