The Bank of England's MPC voted 6-3 to raise Bank Rate by 25 bps to 1.25%. GBP has initially fallen back against both EUR and USD, reflecting the disappointment on the BoE move. In the view of economists at TD Securities, the pound is likely at the whims of risk sentiment.

Three members voted for a 50 bps rise

“The BoE voted to raise Bank Rate by 25 bps to 1.25%. Three members dissented for a stronger 50 bps hike, the same as at May's meeting.”

“GBP initially gave back some early gains on the announcement, reflecting the disappointment with the BoE's 25bps move. Nevertheless, the door remains open for further hikes, which has likely limited GBP's sell-off.”

“The sheer pessimism built into GBP remains the one source of support with positioning and valuations stretched.”