LONDON, December 17, Reuters -- The British pound was down on Friday but was on track to make its biggest weekly rise since October after the Bank of England became the first G 7 economy to raise interest rates.
The pound fell 0.2% at $1.3289 against the U.S. dollar, not far from three-week highs of $1.3376 hit in the wake of Thursday's BoE rate decision. The pound was up 0.3% on the week, which would be its biggest weekly gain since mid-October if it ends the day at that level.
The BoE raised interest rates by 15 bps to 0.25%, sending gilt yields, bank stocks and the pound higher.
Britain became the first G-7 economy to hike rates since the onset of the epidemic, and the U.S. Federal Reserve this week signalled plans to tighten policy in 2022. The European Central Bank only slightly reinved in the stimulus.
The BoE will raise rates in February due to strong UK retail sales data for November and inflation jumping to a decade high.
This latest data shows that the demand side of the UK economy remains robust, even with higher inflation, HSBC strategists said in a note.
The bank expects to see as many as three rate hikes from the Bank of England in 2022, compared to only two earlier in the year.
The pound was generally steady against the euro, at 85.08 pence.