Sterling fell to an 11-week low as economists said a rising tide of bad economic data about consumer morale, manufacturing output and jobs figures meant traders were betting on the first back-to-back cut for seven years.
The pound fell more than 2 cents against the dollar to finish at $1.953.
Global insight’s Howard Archer said the decision was “finely balanced”.
The Bank’s Monetary Policy Committee cut interest rates from 5.25 per cent to 5 per cent last month and had been expected to hold them until June.
However, official figures yesterday showed manufacturing had dropped 0.5 per cent in March, its biggest fall for six months. Nationally, figures showed consumer confidence had fallen to its lowest point for four years.
However, Charles Stanley economist Ed Menashy said he felt rates would be held.
“The bank recently hinted the economy was performing better than expected,” he said.
“It has listening posts all over the country and knows what’s going on.”