Pound Holds Strong Amid Rate Changes: Analyzing Sterling's Recent Performance

The pound remained stable against the euro and dollar following a Bank of England rate cut, while it surged against the yen post-BOJ rate increase. Traders expect more cuts, with concerns over inflation's impact on future rate decisions, influencing the currency's movements.

The pound held steady against the euro and dollar on Friday, following the Bank of England's anticipated rate cut. It also reached its highest level since 2008 against the yen, as traders capitalized on positions post-Bank of Japan rate hike.

Sterling remained largely unchanged against the dollar, trading at $1.3378, while it slightly depreciated to 87.55 pence against the euro. However, the pound soared nearly 0.8% against the yen, reaching 209.75, its highest since August 2008. This surge came as traders adjusted their strategies following the BOJ's decision to increase rates, despite a narrowing interest rate gap over four years.

The BoE, meanwhile, expectedly reduced rates by a quarter-point on Thursday. The narrow voting margin suggested some policymakers doubted further easing amid persistent inflation. Governor Andrew Bailey noted rates would generally trend lower but at a potentially slower pace. Markets indicate expectations for at least one more rate cut by June, with a conceivable secondary reduction by the year's end.

(With inputs from agencies.)