Wednesday 22 March 2017

Sterling rises on BoE rates statement

Sean Duffy

Traders work on the floor of the New York Stock Exchange in New York City. Photo: Getty Images
Traders work on the floor of the New York Stock Exchange in New York City. Photo: Getty Images

The Bank of England scrapped plan to cut interest rates and said borrowing costs could now move in either direction as the slide in sterling following the Brexit vote prompted it to ramp up its forecasts for growth and inflation in 2017.

The battered pound extended its gains yesterday and British government bond prices fell after the BoE shifted to what Governor Mark Carney called "a neutral stance" on what its next move on interest rates would be.

The UK's central bank, which has come under heavy political criticism for its near-zero rates, sharply adjusted its view of when Britain's economy will feel the pain of June's referendum decision.

The BoE announcement came on the heels of a verdict in the UK High Court stating that Westminster would have to vote on triggering Article 50 of the EU Constitution, the mechanism Britain must invoke to begin the exit process from the EU. The High Court verdict saw a surge in the pound, which was bolstered by Mr Carney's comments later in the day. The UK currency was trading at €1.12 late yesterday afternoon.

In Dublin, the Iseq overall index of Irish shares was up 0.23pc, or 13.72 points, to close at 5,923.12.

Shares in Bank of Ireland were the biggest winners of the day, rising by 3.6pc, while hotel group Dalata improved by 3pc.

Irish food group Glanbia gained 1.9pc, with the company's stock continuing to rise after positive results announced earlier this week.

Zamano shares lost 2.8pc yesterday, while financial firm IFG lost 2pc.

On European markets, the German DAX was down 0.4pc, the French CAC was down 0.1pc, while the Spanish IBEX 35 was flat. London's FTSE 100 index lost 0.94pc.

Additional reporting by Reuters

Irish Independent

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