LONDON – The pound jumped on Thursday lunchtime after the Bank of England held interest rates for another month, but struck a hawkish tone in doing so.
The bank’s Monetary Policy Committee voted 5-3 in favour of holding rates at their current levels, when just one member of the committee had been expected to back a rate hike.
Those members cited concerns about inflation overshooting its government mandated target of 2% substantially in recent months as their reason for backing a hike.
Falling sterling has pushed up the price of importing goods, passing through to everyday items that regular Brits buy.
As a result of the hawkish hold, investors are buying into the pound heavily on expectations that a rate hike could be close.
Sterling, which had been down a little in morning trade, popped higher just after 12.00 p.m. BST (7.00 a.m. ET), climbing to 1.2781 against the dollar, as the chart below illustrates: