The pound fell sharply after the minutes to the latest meeting of UK rate-setters unexpectedly showed that one member voted to cut interest rates by a quarter point on December 8. The Bank of England's nine-member Monetary Policy Committee voted 8-1 to leave rates on hold at 4.50 pct, with Stephen Nickell the one dissenting voter. Prior to this month, the MPC had voted unanimously to leave rates unchanged since September. Analysts had fully expected a 9-0 vote and today's news is likely to increase speculation that interest rates could be set to fall in 2006, possibly as early as February. At 10.11 am, the pound was trading at 1.7507 against the dollar, down sharply from 1.7563 just before the announcement. The euro meanwhile was at 0.6788 stg, up from 0.6772 previously. Nickell argued that there was an immediate case for a cut, as he considered the BoE's last round of projections to be optimistic. He also felt that CPI inflation is likely to undershoot the BoE's 2.0 pct target in the medium term. The majority, however, believed growth and inflation were developing in a way that had been predicted by the central bank and their case for no change centred on a wait-and-see approach. While tentative signs of a pick-up in consumption was noted, they felt it was necessary to wait for data from the crucial Christmas sales period. The minutes also showed that some members continue to believe that there are dowside risks to the growth forecast. "UK MPC minutes surprisingly showed one dissenter calling for a 25 basis point reduction. Although this meant he was still comfortably out-voted 8-1, it is a dovish development that will unnerve sterling and provide additional impetus to the recent rally in interest rate futures contracts," said Daragh Maher at CALYON.