The pound tumbled more than a cent against the dollar today after the Bank of England left interest rates on hold.

Traders who had taken long positions in sterling on the outside chance interest rates would rise for the second month in a row were forced to unwind them quickly, pushing the pound lower against the greenback.

The pound, which had been trading at around $1.993 ahead of the noon decision, was down 1.08 cents at $1.9822 by late afternoon.

But few in the City are betting against the rate being increased as early as next month, and possibly hitting 6% by the year-end. The Bank's monetary policy committee left rates at 5.5% today, a month after lifting them for the fourth time since last August.

The decision was welcomed by the City and big business, but economists are warning the Bank has simply put off further rises. 'UK businesses are experiencing acute pain, and the pressures will inevitably worsen in forthcoming months,' said British Chambers of Commerce economist David Kern. 'Though the measures already taken must be given more time to work, a further increase in interest rates may eventually prove unavoidable.'

SOURCE: thisismoney.co.uk