A polarization-based extrinsic fibre Fabry–Perot interferometric sensor for the measurement of velocity and displacement of a vibrating target is demonstrated in this work. It operates on the principle of dual interference within a single interferometric or 'sensing' arm which, in addition, provides a sense of direction of the moving target. This has been made possible by the introduction of a retarding film positioned along the optical path between the sensing fibre end and the intended target. Two sets of interference signals are thus propagated and detected along one fibre arm to give robust and repeatable displacement–velocity information which has been found to be relatively insensitive to other external effects such as minor temperature changes. The sensor has been found to be capable of measuring the desired velocity information of an inclined target while typical excitation frequencies investigated ranged from ~ 2 to 60 Hz. Experimental results from a sensor configuration employing a polarization-maintaining (PANDA type) fibre as the sensing arm and operated at 1310 nm are presented.