Pound Drops as BoE Holds Rates Amid Fed Hike

The British pound extended its losses on Thursday after the Bank of England decided to keep interest rates at 3.75%, following a split vote of 6-3. This decision came just a day after the Federal Reserve raised its own rates, which put downward pressure on the GBP/USD pair.

Earlier in the session, the pair traded around 1.3375 before giving back initial gains, but ultimately fell to 1.3381, down over 0.23% from the previous day's close.

The Bank of England's decision to hold rates has created a widening interest rate gap that favors the US dollar, which is expected to continue putting downward pressure on GBP/USD in the coming weeks.

Derivative traders are advised to prepare for continued downward pressure on the pair, with research showing that it tends to decline by an average of 1.8% in the month following contrasting central bank decisions.