Sterling fell sharply on Thursday after the Bank of England left its main interest rate unchanged.
The BoE kept the Bank Rate at 0.1%, dashing investors' expectations for a hike that would have seen it become the first of the world's big central banks to raise rates after the COVID-19 pandemic.
Sterling slid 1% versus dollar to $1.3561, its lowest level in more than a month, after touching a weekly high during Asian trading hours. Versus the euro, the pound fell 0.5% to a month low of 85.21 pence.
"Sterling is selling off hard on the no change from the BoE and is likely to continue lower in the short term. Much was built into a hike today," said Neil Jones, head of FX sales at Mizuho,
"However, my sense is a hawkish hold rhetoric will ensue and limit the current sell off," he added.
Markets were pricing in a rate rise to 0.25%, but economists polled by Reuters said it was too close to call, as Britain grapples with balancing rate rises to combat inflation with worries about the growth outlook.
Sterling has been weak versus the dollar over the past three months, with several signals by BoE that the bank was ready to act to contain growing inflation only moderately supporting sterling as Britain faced a crisis over fuel and shortages of workers.
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