Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

4-Traders Homepage  >  Indexes  >  World  >  FTSE 100    F100   GB0001383545

Indicative prices
FTSE 100 (F100)
Mes dernières consult.
Most popular
SummaryQuotesChartsNewsAnalysisHeatmapComponents 
News SummaryAll newsNews of the components ofTweets

Sterling, Bond Yields Tumble on BOE Rate Rise

share with twitter share with LinkedIn share with facebook
share via e-mail
0
11/02/2017 | 02:09pm CET
By Christopher Whittall, Mike Bird and Riva Gold 

The British pound slid sharply and bond yield fell after the Bank of England raised interest rates for the first time in over a decade but signaled that further increases aren't imminent.

The BOE's rate-setting committee voted by a margin of seven votes to two to raise its main policy rate from 0.25% to 0.5%, in a widely expected policy shift.

That still triggered a sharp market reaction, with sterling weakening and bond yields falling -- moves that are usually consistent with expectations that the central bank won't rush to raise interest rates further.

Despite the symbolic significance of the BOE's rate rise, this will be a very shallow and gradual tightening cycle, said Jeremy Lawson, chief economist at Aberdeen Standard Investments.

The pound was trading down by 1.3% against the euro after the announcement at EUR1.266, returning to lows recorded last week. Against the dollar, sterling was down by 0.9% at $1.313. The yield on 10-year U.K. government debt fell around 0.06 percentage point to 1.288%, according to Tradeweb. Yields fall as prices rise.

The Bank of England didn't include its guidance from September that interest rates may need to rise by more than market participants expect in its statement. It also said that its outlook for inflation and economic activity were broadly similar to its last projections in August.

"Markets seem to be reacting to the fact that the BOE has displayed quite a conservative outlook for the U.K. economy," said Viraj Patel, foreign-exchange strategist at ING Bank.

But he added that he believes that the pound is still more likely to appreciate than fall from here.

"It doesn't seem like they're giving a 'one and done' signal on interest rates," Mr. Patel added. "From my point of view I'll be buying this dip basically."

Currencies typically decline when investors expect interest rates to remain low, as they shift their investments toward those that offer higher yields. Moves in bond yields tend to be heavily linked to short-term interest rates.

The export-heavy FTSE 100 was up 0.6%. Some of the FTSE 100 companies who generate the greatest share of revenues overseas climbed after the announcement as the pound fell, with British American Tobacco up 1.5%, Shire up 1.1% and Standard Chartered up 1.6%.

The FTSE Small Cap index of smaller U.K. companies was flat while the FTSE 250 index edged up just 0.1%, compared with a 0.6% climb for the export-heavy FTSE 100.

Shares of U.K. lenders were mixed following the announcement, with more internationally-focused banks outperforming because of currency benefits and the fact that higher rates ahead tend to boost banks' lending income. Shares of U.K.-focused lenders Royal Bank of Scotland Group and Lloyds Banking Group were down around 1.4% each, while Barclays, HSBC Holdings and Standard Chartered all traded higher.

The gains in British equity indexes ran against the course of falling shares across Europe. The Stoxx Europe 600 was down 0.4% midway through the European session.

Write to Christopher Whittall at [email protected], Mike Bird at [email protected] and Riva Gold at [email protected]

share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news on FTSE 100
12:00pDJEUROPE MARKETS : European Stocks Hold Steady Around 2-week High, But Thomas Cook..
11:22a THOMAS COOK : Crowded Spanish holiday market takes toll on Thomas Cook
10:32aDJLONDON MARKETS : FTSE 100 On Course For 3rd Straight Gain, With U.K. Budget On D..
11/21DJEUROPE MARKETS : European Stocks 'burst Into Life' As Germany's DAX Ends At 2-we..
11/21DJEUROPE MARKETS : European Stocks 'Burst Into Life' As Germany's DAX Ends At 2-we..
11/21 Consumer stocks and rosy results boost FTSE as easyJet soars
11/21DJEUROPE MARKETS : European Stocks 'Burst Into Life,' With German DAX Aiming For 2..
11/21 Babcock results overshadowed by UK defence spending worries
11/21DJEUROPE MARKETS : European Stocks Look For 2nd Straight Win Despite Choppy Trade
11/21 Death and the discount rate - UK companies weigh pensions tweaks
More news
News of the components of FTSE 100
03:36p ANGLO AMERICAN : OTC Markets Group Welcomes Anglo American to OTCQX
03:36p GLENCORE : Announcement in connection with Katanga Mining Limited
03:31p UK government woos young voters with cut in stamp duty property tax
03:30p WORLDPAY : Form 8.5 (EPT/NON-RI) - WORLDPAY GROUP PLC - AMENDMENT
03:25p Failed airline Monarch wins court appeal to keep rights over airport slots - ..
03:25p TESCO : Form 8.5 - TESCO PLC - Amendment
03:20p DIRECT LINE INSURANCE : Launch of Tender Offer
More news
Chart FTSE 100
Duration : Period :
FTSE 100 Technical Analysis Chart | F100 | GB0001383545 | 4-Traders
Technical analysis trends FTSE 100
Short TermMid-TermLong Term
TrendsBearishNeutralBullish
Top / Flop FTSE 100
FRESNILLO 1346 Delayed Quote.4.10%
STANDARD CHARTERED 752.1 Delayed Quote.4.02%
SHIRE 3769.5038 Delayed Quote.3.79%
KINGFISHER 319.8 Delayed Quote.3.66%
OLD MUTUAL 197.9 Delayed Quote.3.61%
PRUDENTIAL 1890.75 Delayed Quote.-1.27%
TAYLOR WIMPEY 193.7 Delayed Quote.-1.63%
PERSIMMON 2618.3738 Delayed Quote.-2.12%
BERKELEY 3667 Delayed Quote.-2.34%
BARRATT DEVELOPMENTS 615.5 Delayed Quote.-2.84%
Heatmap :