Market Reactions to The Bank of England's Decision

The Bank of England's surprising decision to hold interest rates steady has sent immediate ripples through the financial markets. Sterling fell by 0.8% against the dollar, reaching a near two-week low, signaling investor reactions to the central bank's cautious stance amidst shifting economic conditions.

This decision reflected in short-dated UK two-year gilt yields, which slipped to a three-week low of 3.63%, dropping 9 basis points. Such movements underscore market anticipation regarding the possibility of future interest rate cuts should inflation continue its downward trend.

Meanwhile, UK 10-year gilt yields decreased marginally, falling by 1.5 basis points. The UK FTSE 100 slightly recuperated some losses following the announcement but remained down by 0.1% for the day, portraying underlying market uncertainties.