Sterling slumps ahead of BoE decision after Fed hikes rates again

Sterling slid against the dollar on Thursday after the Federal Reserve jacked up interest rates again, and as traders awaited the latest decision from the Bank of England (BoE), Reuters reported
The greenback rose along with U.S. bond yields after Fed Chair Jerome Powell signalled that interest rates were likely to have to rise higher than expected to crush inflation.
The dollar’s rise was particularly pronounced against the pound, with traders selling sterling in expectation the BoE would strike a less aggressive tone than the Fed.
In morning trading in London, sterling slumped 1.26% to $1.1247, its lowest since Oct. 21. The euro was also stronger against the pound, rising 0.42% to 86.54 pence.
The Fed raised interest rates by 75 basis points (bps) for the fourth consecutive meeting on Wednesday, taking the target range to 3.75% to 4%.
The BoE was widely expected to raise borrowing costs by an historically large 75 bps to 3% later on Thursday (1200 GMT). Yet some analysts said there was a slim possibility of a smaller 50 bps hike, given that the BoE is grappling with a weak economy and uncertainty about fiscal policy.
“We expect the BoE to signal that a larger hike today is unlikely to be the first of a series of larger hikes,” said Lee Hardman, currency analyst at MUFG, in a note to clients. “It should encourage a weaker pound.”