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Bull Trader USA

London Markets: Pound, gilt yields rise after Bank of England makes surprise rate hike

The Bank of England on Thursday made a surprising decision for a second month in a row, opting to lift interest rates.

The Bank of England, by an 8-to-1 vote, increased its benchmark rate to 0.25% from 0.10%. Last month, traders had expected a rate hike, which the central bank postponed while waiting for more data on how the labor market responded to the end of the furlough program. The U.K. government’s worries around the omicron variant of coronavirus, as well as central bank speeches ahead of time, led traders to expect the BOE would hold pat in December.

The pound
GBPUSD,
+0.75%

rose as high as $1.3347 from $1.3262 on Wednesday.

The 2-year gilt
TMBMKGB-02Y,
0.567%

rose 5 basis points to 0.535%.

The FTSE 100
UKX,
+1.08%

retained gains of around 1%.

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