GBP/USD Holds Near 1.66 as BOE Minutes Show Dissent

The pound strengthened as the Bank of England said two policy makers wanted an interest-rate increase this month, marking the first split on rates in more than three years and the first under Governor Mark Carney.

Sterling gained versus all of its 16 major peers after minutes of the Monetary Policy Committee’s Aug. 6-7 meeting showed Martin Weale and Ian McCafferty voted to raise the benchmark rate by 25 basis points from a record-low 0.5 percent. Eleven of 18 analysts in a Bloomberg News survey had predicted a unanimous vote to keep borrowing costs unchanged. Short-sterling futures contracts fell and U.K. government bonds dropped as investors raised bets that borrowing costs will increase.

“The vote shows that the Bank of England is gradually moving towards raising rates,” said Lee Hardman, a foreign-exchange strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “Clearly the minutes are more hawkish than the quarterly Inflation Report, so that is providing some support for the pound today.”

Bloomberg

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