Pound rallies as BoE policy split deepens

London - The pound rose versus the euro and gilts fell after a surprise division within the Bank of England’s monetary-policy committee overshadowed its decision to leave the benchmark rate unchanged.

Sterling gained against most major currencies as three of eight members voted for an increase in rates, swelling the ranks of dissenters. Kristin Forbes was the lone member who sought an increase in last month’s meeting.

The biggest division on interest rates in six years underscores concerns about inflation, which accelerated to the fastest in four years during May. Earlier on Thursday, the pound weakened as UK retail sales excluding auto fuel dropped 1.6%, the most this year.

“It’s a big surprise, isn’t it?” said Lee Hardman, a foreign-exchange strategist at MUFG. “Especially in the aftermath of the election, you would have thought that would make them more cautious. The market has to be more wary now of the risk of a rate hike.”

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