The pound rose on Thursday after the Bank of England kept rates steady, citing a weaker jobs market and higher energy prices, which investors took as a clearer sign of the trajectory for UK rates, while other countries’ likely paths are less obvious.

On a busy day for central bank decisions, the BoE left rates at 4.25%, as expected, and the minutes showed support was building among policymakers for a cut, possibly as soon as August, according to markets pricing.

The pound rose as much as 0.2% and was last 0.1% higher at $1.34325 and also 0.16% firmer against the euro, which traded at 85.40 pence..

The BoE’s decision was welcomed by markets with the pound outperforming other risk currencies holding firm against the stronger dollar, which has drawn in safe-haven demand as the threat of a broader Middle East conflict looms over markets. The BoE’s decision came hot on the heels of a rate cut by the Swiss National Bank earlier on Thursday that was in line with expectations, but smaller than some in the market had hoped for, given the strength of the franc this year, and a surprise cut from Norway’s Norges Bank shortly after.

Marcus Jennings, fixed income strategist at Schroders, said the June BoE meeting had proven to be one of the less volatile moments for the gilt market.

Two-year gilt yields fell to session lows at 3.886% after the BoE decision, before edging higher to 3.897%, and traded in a far smaller range than they did on the day of the May meeting, when they swung between a high of 3.935% and a low of 3.791%.

Source: Globalbankingandfinance