Sterling eased against the Dollar on Friday following the Bank of England’s rate hike on Thursday in a bid to curtail soaring inflation.

The Bank of England increased its main interest rate by 50 basis points to 1.75%, the highest since the end of 2008, but stated the UK economy would tip into recession at the end of this year, and not emerge from it until 2024.

According to analysts, the downbeat outlook, together with the central bank’s determination to combat inflation – which the BoE believes will reach 13% - will likely maintain pressure on the Pound.

"For the Pound, that is not a positive when the central bank is raising rates into a recession as that raises the outlook for a sharp slowdown," stated Lee Hardman, MUFG currency analyst in London.

"We remain bearish on the Pound. But a lot of that is priced in and the Pound is being driven by global risk sentiment."

Sterling was last trading down 0.1% against the greenback at $1.21385, after falling to a low of $1.2065 following the Bank of England’s rate hike announcement, Reuters news agency reports.

In contrast, the Pound recorded a 0.1% gain against the Euro, after a 0.64% decline on Thursday, the largest one-day drop since 14th June.

The market is now looking to Friday’s jobs report coming out of the United States for indications about the country’s economy and labour market. According to economists, a rise of 250,000 jobs is forecast for July, after 372,000 were added month before.

On Friday, the U.S. Dollar index rose 0.21% to 105.92, after falling 0.68% on Thursday, the largest drop since 19th July. This remains around 3% under the mid-July peak.