Pound Sterling holds gains as traders pare BoE interest rate cut bets after tight vote
The Pound Sterling (GBP) holds onto Thursday’s gains during the European trading session on Friday as traders pare bets supporting interest rate cuts by the Bank of England (BoE) after the monetary policy announcement on Thursday, in which officials decided to cut rates but after a very tight vote.
The data from money markets shows that traders see a 17 basis points (bps) interest rate reduction in the remainder of the year, suggesting that the BoE will hold interest rates at their current levels until 2026.
On Thursday, the BoE reduced its key borrowing rates by 25 basis points (bps) to 4%, as expected, but the decision was taken by a very slim majority, something that markets hadn't expected. Out of the nine members of the Monetary Policy Committee (MPC), five supported a rate cut, fewer than the seven anticipated by economists. Moreover, the initial vote split was an unprecedented 4-4-1, with four members favouring a hold and one opting for a 50 basis point cut. A second vote was needed to reach the final 5-4 majority to cut rates by 25 basis points, something never seen before.
Source: FXstreet
