Pound Rallies on Hawkish BoE Vote Then Sinks on Dovish Guidance

The Bank of England held its Bank Rate at 3.75% for a fifth consecutive meeting on Thursday. The decision was not unanimous: three members of the Monetary Policy Committee dissented, backing an immediate quarter-point increase—a more hawkish split than markets had anticipated.

Sterling initially jumped on the news, with the six-to-three vote signaling growing appetite for tighter policy. However, the rally proved short-lived. In its accompanying statement, the central bank talked down the hawkish dissent, stressing that policy would need to remain restrictive for an extended period.

The pound’s failure to hold gains highlights the market’s sensitivity to any hint of an early pivot. While the dissenters injected some upward pressure, the overriding message from the BoE was one of patience, limiting the currency’s upside.