Pound Rises as BoE Cuts Rates Amid Division

The British pound rose, reversing an earlier fall after the Bank of England cut interest rates. Despite the rate cut, policymakers remained divided, hinting at limited space for more easing. UK government bond yields climbed, while future rate cut expectations shifted to June 2026.

The British pound surged after the Bank of England's decision to cut interest rates, reversing its earlier decline. The move comes as policymakers remained split, expressing limited capacity for further easing. Despite a slowdown in inflation, the bank signaled a gradual reduction in rates.

The pound climbed 0.2% against the dollar, reaching $1.3405, and rose 0.4% against the euro to 87.44 pence. Concurrently, UK government bond yields increased, with the benchmark 10-year gilt yield rising by 3.5 basis points to 4.515%.

The Monetary Policy Committee was narrowly divided, with a 5-4 vote in favor of the rate cut. Bank of England Governor Andrew Bailey shifted his stance, voting for the reduction. Analysts anticipate potential further rate cuts, though exact timing remains uncertain.