Pound Sterling Falls as BoE Holds Rates Steady with 7-3 Split Vote

Pound Sterling Falls as BoE Holds Rates Steady with 7-3 Split Vote

Published: June 19, 2025 | 🖋️ Tredu Central Bank News Desk

BoE Keeps Rates at 4.25%, GBP Drops

The Pound Sterling (GBP) retreated sharply against its major peers after the Bank of England (BoE) decided to maintain its base rate at 4.25%, aligning with market expectations. The central bank maintained a cautious tone amid persistent inflationary pressures and geopolitical uncertainty.

MPC Split Reveals Growing Dovish Sentiment

The decision was not unanimous. Three Monetary Policy Committee (MPC) members — Swati Dhingra, Dave Ramsden, and Alan Taylor — voted for a 25 basis point cut. Their reasoning included:

• A softening labor market
• Subdued consumer demand
• Wage growth aligning with inflation targets

This 7-3 split vote marks rising internal pressure for monetary easing ahead.

Geopolitical Risk Adds to GBP Weakness

Additional downside pressure on GBP stems from heightened Middle East tensions, with markets jittery over reports of a potential U.S. strike on Iran. Risk sentiment deteriorated, pushing investors away from Sterling.

BoE Inflation Outlook

The BoE projects headline inflation to peak at 3.7% in September, before trending lower to remain below 3.5% through year-end. This aligns with the bank’s current “gradual and careful” approach to monetary easing.

Also Read on Tredu:

• Live GBP Cross Rates
• BoE Policy Tracker
• UK Economic Indicators Dashboard