Pound up as fears of Bank rate change ease

Sterling rallied sharply on foreign exchange markets yesterday as the Bank of England emphasised that it had no immediate plans to change the rate that it pays to commercial banks on sums deposited with it overnight. However, economists attending a “teach-in” at the Bank yesterday were said to have received indications that no such move was imminent, with officials suggesting the Bank was “some way” from deciding on any change. Sterling, which had traded as low as $1.5768 on Monday, rallied as high as $1.5989 once the comments began to circulate in the market. Yields on two-year gilts also rose by 14 basis points at one stage, one of the biggest one-day moves this year.