Pound and bond yields dip after BoE holds rates but three officials dissent

BY Reuters | ECONOMIC | 12/19/24 07:07 AM EST

LONDON, Dec 19 (Reuters) - The pound slipped on Thursday after the Bank of England held interest rates but three policymakers voted to lower borrowing costs, denting a rebound against the dollar as markets swung in the wake of the Federal Reserve's decision on Wednesday.

Britain's 10-year government bond yield fell and was last up 1 basis point at 4.569%, from 4.598% before the decision. The BoE held rates at 4.75%.

The U.S. Fed cut interest rates on Wednesday but policymakers said they now envisage fewer rate cuts next year, sending the dollar surging and the pound down more than 1%.

British bond yields rose on Thursday before the BoE decision, reflecting a jump in U.S. government yields overnight. Yields move inversely to prices.

The UK's FTSE 100 was last down 1.1%, having traded around 1.4% lower before the BoE's announcement, after a sharp sell-off in U.S. stocks on Wednesday.

(Reporting by Harry Robertson)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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