Sterling rockets against dollar after Bank of England reveals interest rate decision

Ratesetters turned more hawkish with Haldane voting against the majority for the first time

The Bank's decision pushed the pound up (Reuters)

Pound sterling jumped against the dollar and the euro on Thursday after the Bank of England announced the minutes of its most recent monetary policy committee (MPC).

Sterling was up more than 0.23 per cent against the dollar, and rose 0.54 per cent against the euro.

Although Threadneedle Street opted to hold the base rate at 0.5 per cent, ratesetters turned more hawkish, with Andy Haldane, the central bank’s chief economist, switching to support a hike.

Economists had expected a 7-2 split, but a forecast uptick in inflation led the committee to vote 6-3 in favour of holding. However, the move signals an August hike is more likely.

Mr Haldane’s change of stance marks the first time he has ever voted against the majority, and is also the first time the Bank’s chief economist has dissented since 2011.

Ben Brettell, senior economist at Hargreaves Lansdown, said Mr Haldane’s switch added a “small element of surprise in the voting”

“Sterling jumped on the news, gaining almost a cent against the dollar as traders factored in a bigger chance of a move in August,” he said, before adding a note of caution: “But on balance I still think we might not see a rate rise for the rest of the year - policymakers will at the very least want confirmation that the weak first-quarter growth figure was just a blip before raising borrowing costs.”