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Forex - Sterling hits 2-week highs as BoE rate decision split

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Investing.com - The pound rose to two-week highs against the dollar on Thursday after the Bank of England held interest rates at record lows, but the meeting minutes showed the monetary policy committee was split on the decision.

GBP/USD was up 0.36% to 1.2235 from around 1.2266 ahead of the decision.

Kristen Forbes, who is due to leave the BoE in June, voted in favor of raising the benchmark interest rate to 0.5%, the first monetary policy committee member to do so in over a year.

The other eight members of the committee voted to keep rates on hold at 0.25%.

The central bank also said it was to maintain the stock of asset purchases financed by the issuance of central bank reserves at £435 billion.

Market analysts had expected the central bank to vote 9-0 to keep policy steady.

The central bank warned that inflation is likely to overshoot its target this summer, due in part to higher energy costs and to keep increasing.

"CPI inflation was expected to rise to around the 2% target over the next month or so, and, given the impact of sterling's depreciation, to exceed the target materially by the summer," the minutes said.

The latest UK jobs report on Wednesday showed that while the unemployment rate fell to the lowest since 1975 in the three months to January, wage growth slowed sharply, clouding the economic outlook as Britain braces for Brexit.

The deterioration in wage growth underlined concerns that consumer spending will be eroded as inflation rises.

The euro fell to session lows against the pound following the announcement, with EUR/GBP down 0.58% to 0.8682 from 0.8743 earlier.

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