LONDON, Aug 1 (Reuters) - The pound and British bond

yields fell while stocks climbed on Thursday after the Bank of

England cut interest rates for the first time since 2020 in a

5-4 vote that took borrowing costs down to 5%.

Sterling hit its lowest since early July

immediately after the decision at $1.2752, and was last down

0.73%.

The pound was already trading around 0.65% lower just

before the meeting, with markets pricing in a roughly 62% chance

of a cut.

Britain's benchmark 10-year bond yield was down

6 basis points (bps) at 3.917%, the lowest since March. It was

trading 4 bps lower at 3.934% pre-decision. Yields move

inversely to prices.

The FTSE 100 stock exchange was last 0.2% higher,

having traded flat in the morning session.

British inflation has fallen back to the BoE's 2% target

from a 41-year high of 11.1% in 2022. Although inflation in

wages and in the services sector has remained elevated, BoE

policymakers decided those pressures were benign enough to lower

interest rates after holding them since August 2023.