Sterling Pound Rallies Higher on BoE’s Hawkish Interest Rate Decision

The British pound today rallied higher against the US dollar after the Bank of England announced its monetary policy decision with more members than before voting for a rate hike. The pound had traded lower following the release of the disappointing UK public sector finances report for May early in the European session.

The GBP/USD currency pair today rallied from a low of 1.3103 to a high of 1.3258 after the BoE rate decision, which was interpreted as being hawkish.

The currency pair jumped higher after the BoE left its monetary policy unchanged, but reported that three members had voted for a rate hike. The BoE’s Monetary Policy Committee left its bank rate at 0.50%, its asset purchase facility at £435 billion, and its corporate bond purchases at £10 billion. However, three MPC members Michael Saunders, Andy Haldane and Ian McCafferty voted in favor of a rate hike, which is what triggered the pair’s rally. The pound had traded lower after the Office for National Statistics announced that public sector net borrowing fell to £5bn in May, down £2bn from a year earlier.

The release of the positive US initial jobless claims data by the Department of Labor in the early American session had a muted impact on the currency pair. The Philadelphia Fed Manufacturing Business Outlook missed expectations but did not affect the pair’s performance.

The currency pair’s short-term performance is likely to be affected by the BoE Governor Mark Carney‘s Mansion House speech scheduled for 20:15 GMT.

The GBP/USD currency pair was trading at 1.3250 as at 13:37 GMT having rallied from a low of 1.3103 earlier today. The GBP/JPY currency pair was trading at 145.91 having risen from a low of 144.58.

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