The GBP/USD currency pair settled below Friday’s high of 1.3459, its strongest level since July 25th, in the wake of the Bank of England’s policy decision.
The Bank of England lowered its benchmark interest rate by 25 basis points to 4% at its August 7th meeting – the lowest rate since March 2023.
It was a rare two-round vote that revealed sharp divisions over how to cope with sticky inflation and a softening economy.
Five of the nine policy makers supported a 25 basis point rate cut, while four voted for leaving rates on hold.
It was the first time in the BoE’s history that two votes were required to reach a majority on interest rates.
BoE Governor Andrew Bailey said it was a “finely balanced” decision and reiterated that future rate cuts would be “gradual and careful.”
Meanwhile, markets are now pricing in a 91% chance of a 25 basis point Fed rate cut in September.
Data showed that US job growth had slowed sharply in July, while the services sector had nearly stagnated, which raised concerns over the US economic outlook.
The major Forex pair gained 1.22% for the week.
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