Sterling rose against the dollar and rate futures fell on Thursday after the Bank of England cut rates by 50 basis points, as expected, fuelling the view that rates may not be cut so aggressively going forward. Key rates are now at a record low of 1.5 percent. The Bank said in a statement that "the substantial depreciation in sterling over recent months may help to moderate the impact on UK net exports of the slowdown in global growth." But it added that a weaker pound will raise the cost of imports. Sterling rose as high as $1.5215, according to Reuters data. The euro was down more than 1 percent, hitting a low of 89.08 pence, its lowest since mid-December. "I think it's pretty likely that it was sterling that decided them to slow down the pace of cuts," said Brian Hilliard, economist at Societe Generale. "I still think there's more in the pipeline. Notable by its absence was any comment on quantitative easing. I don't think it's actually on the agenda until they get rates down to close to zero." British front month interest rate futures fell to turn negative after the decision. Front month contracts traded as much as 4 ticks lower, having been between 6 and 8 ticks higher before the announcement. Yields on ten-year gilts were down 1 basis point at 3.26 percent, having been about 3 basis points lower in the run up to the rate decision. Euro zone government bond futures extended gains and two -year bond yields inched lower after the decision. The FTSE 100 was little changed after the decision, down 1 percent at 4,464.62.

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