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Forex: Two MPC members vote for UK rate rise

Sterling up around 30 pips initially after minutes to Aug MPC minutes show two members voting for higher rates. Once again, the currency faces another conflicting message on the path of interest rates. Those voting for higher rates focusing in part taking a tactical perspective, saying it would allow the MPC to deliver on a gradual normalisation of policy. On the other side, the majority saw that there was insufficient evidence of inflationary pressures to justify an increase. Cable has pushed up to the 1.6665 level initially and further short-covering is the risk from here. After the Inflation Report last week, the focus was more on the evolution of the data, but today’s release swings the balance back to tactics and the balance between keeping rates lower for longer and the advantage of an earlier but more gradual approach to policy.

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