Sterling hits record low, BoE fails to spark recovery - Reuters

LONDON, Sept 26 (Reuters) - Sterling fell back towards an all-time low against the dollar on Monday, after a statement from the Bank of England (BoE) disappointed market expectations for an emergency rate hike to shore up the battered British currency.

In a tumultuous day, sterling dived to a record low in Asian trade, then recovered some ground on expectations the BoE would step in to calm a market on edge since the government announced its fiscal plans on Friday.

But the pound came under renewed selling pressure in late London trade after the BoE said it was closely watching markets following sharp moves in asset prices, but stopped short of delivering an emergency rate hike.

It's a statement that suggests (Governor) Andrew Bailey is keeping his fingers crossed that sterling can stabilise before the next Monetary Policy Committee meeting but that seems a long way off," said Chris Scicluna, head of economic Research at Daiwa Capital Markets.

details on the fiscal rules, a change in policy from the government and/or an interest rate hike from the Bank at an emergency meeting before Nov.

Economists and investors said Prime Minister Liz Truss's government, in power for less than three weeks, was losing financial credibility in unveiling a major loosening of fiscal policy just a day after the BoE hiked interest rates to contain surging inflation.

A spokesperson for Truss said the government does not comment on market moves and is sticking to the plan outlined in its so-called mini budget.

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