Above: File image of BoE Governor Bailey at a previous Treasury Select Committee appearance.

Just as the market was focussing on the New Prime Minister Liz Truss, the Bank of England enters the scene and hammers an already fragile Pound.

Pound exchange rates slumped sharply after markets rapidly lowered their bets for a 75 basis point interest rate hike at next week's policy decision following comments from members of the Bank's Monetary Policy Committee (MPC).

"I judged that the more gradual pace of tightening will allow us to reduce those risks, because we will see the effects of the data and we can always stop," said MPC member Silvana Tenreyro. "So it's about going slowly when there is a lot of uncertainty. And that was my judgement."

Tenreyro was addressing Parliament's Treasury Select Committee in a midweek appearance made alongside Governor Andrew Bailey and the Bank's Chief Economist Huw Pill.

Following the testimony money market pricing showed the odds of a 75 basis point hike next week have fallen to 55%, from 71% earlier in the day.

The Pound tracked these expectations lower.

"We have seen another botched effort from the Bank of England today. They had one job which was to talk up the Pound and instead their waffling sees it at US $1.1425," says Shaun Richards, an independent economist who advises UK pension and investment funds.

The comments made by the panel reflects a Bank that remains reluctant to raise interest rates to beat inflation, instead hoping prices will fall back as the economy slows.

Testimony by Bank of England Chief Economist Huw Pill suggests policy makers now expect measures to help households by prime minister Liz Truss will do the heavy lifting in fighting inflation.

"Net-net on the implications for headline inflation in the short term, I would expect that to see a decline," said Pill of the plans being floated by the government.

Bailey also cast doubt on when, or whether, the Bank would start to sell the bonds it purchased under quantitative easing, in a process known as quantitative tightening (QT).

Bailey said QT was “not intended, for obvious reasons, to cause a disruption to the market. The programme, which has been predictable and has a gradual element, is all conditioned on the logic that we need to behave in a way that avoids disruption”.

With the government about to sell more debt to fund its support package, the Bank appears keen to avoid pushing debt yields even higher by contributing the supply of bonds to the market.

While the Bank has raised rates to 1.75%, it is far behind where the market believes it should be, and it appears this will remain the case.

For an already weak Pound this is proving a problem:

The Pound to Euro exchange rate has fallen a percent on the day to 1.1515, the Pound to Dollar exchange rate is down by a similar amount to 1.14.

In fact, the Pound is the day's second worst performing major currency, coming in just ahead of the laggard Yen.

That Sterling is bottom-feeding with the Yen tells a story in itself: the Yen has been hammered because the Bank of Japan will not raise interest rates for the foreseeable future.

Central bank interest rate expectations therefore matter for currencies, and for the Pound the Bank of England is pulling all the wrong moves.