The Bank of England (BoE) announced its monetary policy decision this Thursday and hiked rates for the fifth consecutive time to curb soaring inflation. The nine-member Monetary Policy Committee (MPC) voted 6-3 for the 25 bps hike in the bank rate to 1.25%, with the minority - Catherine Mann, Jonathan Haskel and Michael Saunders - voting for a 50 bps increase. The UK benchmark rate is now at its highest since January 2009.

In the accompanying monetary policy statement, the BoE noted that the path for interest rates had risen materially since the May meeting, even though there had been relatively little news since then. The BoE further said that it was ready to act "forcefully" to stamp out dangers posed by an inflation rate heading above 11%.

Market Reaction

The latest monetary policy update by the UK central bank, however, failed to impress the GBP bulls. In fact, the GBP/USD pair dropped back below the 1.2100 round-figure mark after the announcement and was last seen hovering near the daily low.