A 6-3 decision to hold rates at 3.75% spurred GBP/USD gains, but Bank of England comments later cooled hike expectations.
The Bank of England kept its Bank Rate at 3.75% for a fifth consecutive meeting, but a 6-3 vote revealed growing dissent, with three members favoring a 25-basis-point hike. The split defied consensus expectations of a 7-2 decision, pushing GBP/USD above 1.3450, a 0.71% gain on the day.
June’s vote had been 8-1, with energy price volatility and a 2.6% CPI reading cited as key concerns. Dissenters warned of second-round inflation effects if shocks persist, while the majority maintained a cautious stance, prioritizing evidence of domestic inflation over immediate tightening.
Governor remarks in the press conference quickly tempered the hawkish signal, emphasizing the Bank’s intent to avoid tightening into an external shock. GBP/USD retreated slightly after the comments, though it remained above key moving averages near 1.3400.