The British pound strengthened to $1.34, its highest level in about two weeks, as traders reacted to the Bank of England’s latest monetary policy decision. The central bank delivered a widely expected 25bps rate cut, bringing the key Bank Rate down to 4%, its lowest level since 2023. However, the decision revealed deep divisions and the cut was approved by a narrow 5–4 majority, following an initial vote that resulted in a three-way split. It marked the first time that a second round of voting was required to reach a final decision. Governor Bailey added that “interest rates are still on a downward path, but any future cuts will need to be made gradually and carefully”. The Bank also raised its inflation forecast for September to 4% from 3.7%. In response, traders have pared back expectations for further rate cuts this year. Markets are now pricing in just 17 basis points of additional easing in 2025, compared to another 25bps cut anticipated before the announcement.