The pound dropped against its major counterparts in the European session on Friday in the wake of the latest monetary policy decision from the Bank of England to keep rate on hold, disappointing some investors who had expected a hike to contain inflation.

The BoE kept the bank rate unchanged at 0.10 percent and the QE program at GBP 875 billion.

Dave Ramsden and Michael Saunders called for an increase in the bank rate by 15 basis points to 0.25 percent.

Policymakers noted that there was considerable uncertainty about the near-term outlook for the labor market, as over a million jobs were expected to have been furloughed immediately before the Coronavirus Job Retention Scheme closed at the end of September.

The decision shocked investors as surging energy and food prices have led to a spike in inflation, exceeding the BoE's target.

Governor Andrew Bailey said that inflation was being driven by global "supply shocks" instead of demand pressure in the economy.

The pound weakened to 1.3438 against the dollar, its lowest level since October 1. The pound is likely to challenge support around the 1.31 level.

The pound touched near a 9-month low of 1.2278 against the franc, from yesterday's close of 1.2303. On the downside, 1.20 is likely seen as the next support for the pound.

The pound was down against the euro, at a 5-week low of 0.8590. Next key support for the pound is seen around the 0.88 level.

The pound hit more than a 3-week low of 152.85 against the yen, from Thursday's close of 153.51. The pound is poised to challenge support around the 150.00 mark.

Looking ahead, U.S. and Canadian jobs data for October, U.S. consumer credit for September and Canada Ivey PMI for October will be published in the New York session.

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