Sterling down 0.7% 'after BoE keeps rates at 0.5%'

The pound has plummeted by 0.7 per cent against the dollar this afternoon (March 10th), following the Bank of England's (BoE) decision to hold the interest rate at a record low of 0.5 per cent.

Forex traders stayed away from sterling, which fell to its lowest level since February 28th at $1.6076, Reuters reports.

Before the BoE announcement, the pound was trading around one per cent higher, however traders had already stated a rate rise this month would have been a surprise.

But the Bank is expected to increase the base rate later this year, with May touted as a possible time to do it.

One London-based trader said: "There was talk that if the BoE was going to raise rates before May they would be doing it this month rather than next."

The BoE has not made a statement following its decision to maintain the interest rate today and it will be revealed in two weeks how the voting went.

Posted by Chris Weaver