Pound rises as rates held

THE BANK of England's decision to leave interest rates unchanged at 5.5 per cent yesterday left industry disappointed as the pound climbed to a new high against the euro.

Employers' organisations and unions renewed their calls for further rate cuts. Kate Barker, chief economist at the Confederation of British Industry, said: "Exporters are struggling with a stubbornly strong pound."

Ian Peters, deputy director general of the British Chambers of Commerce, described the Bank's inaction as a "bitter pill for manufacturers".

Earlier in the day, the MSF union demonstrated outside the Bank with a giant aspirin. Eddie George, the Bank's Governor, had been criticised for saying earlier in the week that a painkiller was all he could offer businesses struggling with the strong pound.

The pound jumped after yesterday's decision, hitting another record high against the euro. It closed at a new record of 67.48p, off earlier highs of 67.19p.

On the stock market, the FTSE gave up all its earlier gains following the Bank's decision, ending the day down 13 points at 6,048.3.

Privately, some of the business lobby groups admitted that it was not surprising the Bank had left rates unchanged after five cuts in the preceding five months, and with the Budget just a few days away. The Monetary Policy Committee was briefed this week on the outlines of the Budget by Treasury officials.

Most City analysts said rates were likely to fall again later in the spring. Ken Wattret at Paribas said: "We do not see this as the end of the easing cycle, more a pause for breath."

Major mortgage providers such as Halifax left rates unchanged following yesterday's Bank of England decision.

Recent figures have suggested that although the UK economy remains weak, it is no longer slowing rapidly.

Yesterday, the CBI reported signs of optimism on the high street in its monthly distributive trades survey. Sales volumes were flat in February, according to the CBI, and are expected to rise in March.

Alastair Eperon, chairman of the CBI's distributive trades panel, said: "Retailers appear to be a little more confident about short-term business prospects compared with the record falls in optimism seen in the second half of 1998."

The Chartered Institute of Purchasing and Supply said activity in the service sector had fallen for the fourth month running in February, but the pace of decline was less rapid. Its activity index climbed to 48.4 from 48.2 in January. The amount of new business also fell less than the previous month.

Peter Thomson, CIPS director general, said: "The UK service sector is entering calmer waters."

Neither survey is considered by economists to have a strong record of tracking official data, but the slightly more upbeat message yesterday tied in with other recent news.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Business Analyst - Financial Services - City, London

£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...

Recruitment Genius: Administrator - IFA Based

£22000 - £24000 per annum: Recruitment Genius: This is an opportunity to join ...

Day In a Page

General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
Public relations as 'art'? Surely not

Confessions of a former PR man

The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

Bill Granger's luxurious sweet treats

Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

The mother of all goodbyes

Paula Radcliffe's farewell to the London Marathon will be a family affair
Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

Steven Naismith: 'We know we must do better'

The Everton forward explains the reasons behind club's decline this season
Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

Michael Calvin's Last Word

Praise to Wenger for having the courage of his convictions