Pound reaches two-year high as Bank of England holds interest rates steady

The pound surged to its highest level since March 2022, breaking through the $1.33 mark, after the Bank of England decided to keep interest rates steady at 5 per cent.

High interest rates tend to bolster a currency's value by attracting investors seeking better returns. Although the UK has slowed its cutting cycle, traders expect only one more rate cut.

Nick Andrews warned that sterling's gains may be short-lived, predicting that the Bank may eventually have to cut rates more aggressively than currently anticipated.

The decision to pause rate cuts weighed on UK government bonds, driving 10-year gilt yields up by four basis points to 3.88 per cent.

Read at Business Matters