LONDON (AFX) - Sterling rose against the dollar, while gilts fell after the Bank of England's Monetary Policy Committee cut its main cost of borrowing by 25 basis points to 5.50 pct.
Audrey Childe-Freeman, economist at CIBC World Markets, said: "The surprise effect was pretty limited and that is why we are not seeing much positive reaction into the gilt market.
"It should be good news for sterling as today's rate action proves that the Bank of England remains very open and ready to take action regarding the international scene, which is reassuring news with regards to the future growth outlook," she said.
At 12.10 pm, the June long gilt contract was trading at 116.34 while short sterling was at 94.84, compared with 116.52 and 94.85 respectively at 11.55 am.