Sterling plunges after profit-taking selloff

Sterling pound dropped although the rate hike decision of BoE Thursday because of heavy selling from the part of bulls who focused on profit-taking to benefit from the highs reached immediately after the central bank decision.

GBP/USD rose to 1.2610 in response to rate hike decision before declining to 1.2543.

 The currency ignored positive developments such as raising growth expectation to its highest ever, which suggests that a future hike is in the pipeline.

Risk aversion is also one of the factors that led to the plunge of the pound as concerns of bank failure popped up in the market again after PacWest Bancorp plunged 20% after it reported a drop in deposits last week and pledged an additional $5.1 billion of its loans to the central bank.

The British currency also dropped against all majors after soaring as a reaction to rate decision.