Two members of the Bank of England’s Monetary Policy Committee, Martin Weale and Ian McCafferty, voted for a rate increase by 25 basis points while the other seven members of the committee voted to keep rates on hold. It was the first time there was a divided decision in about three years.
The pound rose to $1.6645 rising by 0.18 per cent in intraday trading.
Mark Carney, the Governor of the Bank of England, has been dubbed an “unreliable boyfriend” by a U.K. politician after appearing to flip-flop on interest rates. However, the presence of dissenters means rates hike may occur sooner than later. Most analysts are now forecasting the first interest rate rise in February 2015, or May 2015 – when there will also be a general election.
Nevertheless, the rising GBP against the USD may be a one-time thing as the USD is poised for a rally on the basis of improving fundamentals. Furthermore, analysts view the GBP/USD rate as overvalued.