British pound drops after BoE hikes rates by 0.25%

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FILE PHOTO: British five pound banknotes are seen in this picture illustration

LONDON – The British pound reversed its earlier gains and fell on Thursday, as investors interpreted a Bank of England 8-1 vote in favour of raising interest rates by 0.25% to be a more dovish tightening than expected.

The pound was last down 0.3% at $1.3096, the day’s low, after trading as high as $1.3211 before the BoE announced its decision to raise rates to 0.75%. Against the euro sterling weakened 0.4% to 84.36 pence. It had traded at 83.68 pence before the announcement.

British shares ticked up, with the exporter-heavy FTSE 100 index gaining 0.4%.

(Reporting by Tommy Reggiori Wilkes; Editing by Saikat Chatterjee)

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