Sterling plunges 1% against dollar after Bank of England governor's comments on rate policy

The British pound tumbled more than 1% against the U.S. dollar on Thursday after a The Guardian report that Bank of England Governor Andrew Bailey suggested more positive inflation data could lead the central bank toward a more aggressive approach to interest rate cuts.

Sterling was down 1.12% to $1.3119 at 9:45 a.m. in London. The U.K. currency was buoyed following the BOE's September meeting on Sept. 19, as British policymakers struck a more hawkish tone that those at the U.S. Federal Reserve.

Bailey told the Guardian newspaper in an interview published on Thursday that the BOE could become "a bit more activist" in its approach to rate cuts if inflation developments continued to be good.

He also said he was encouraged that cost of living pressures had not been as persistent as previously thought, according to the Guardian.

CNBC has reached out to the BOE for comment on the quotes.

The central bank held its key rate in September, after cutting it by 25 basis points in August to 5%. During the September meeting, the institution expressed concerns about services inflation and the labor market, despite headline inflation hovering near its 2% target.

Pound vs dollar.