GBP Edges Higher on Hike Speculation

The Pound Sterling (GBP) has edged higher as some Bank of England (BoE) deputy governors lean towards a rate hike. At its September 17 meeting, the BoE voted to hold the UK's Bank Rate at 3.75% by six votes to three, but half of those who voted to hold now suggest that a hike may be needed if inflation continues to rise.

Deputy Governor Ramsden said in London on Monday that there could be a case for raising the Bank Rate if upside pressure on the inflation outlook keeps building. He was backed by Deputy Governors Breeden and Lombardelli, who made the same argument last Thursday.

The BoE has held its rate at 3.75% all year, arguing that its policy is already restrictive, while other major central banks have raised rates in response to inflation concerns. However, if Ramsden, Breeden, and Lombardelli join Chief Economist Pill and external members Greene and Mann in voting for a hike, the committee would likely raise the rate by six votes to three.