The Bank of England raised its key interest rate to 4% on Nov. 5 as sterling held near $1.35, putting the central bank’s inflation fight alongside a market weighing what comes next.
At its meeting ending Nov. 4, the Monetary Policy Committee voted 8-1 to increase Bank Rate by 0.25 percentage points. Committee member Catherine L Mann preferred a 0.5-percentage-point move to 4.25%. Bank of England Gov. Andrew Bailey said the increase “shouldn’t be seen as the first in an inevitable long sequence of hikes.” Bank Rate changes generally affect banks’ loan and savings rates, the central bank said.
The Bank said U.K. consumer price index (CPI) inflation stood at 3.5% in September and could reach about 5% by mid-2027. It linked the projected rise to higher energy prices associated with the Middle East conflict, citing the risk that those costs would feed into other prices and wages. Its minutes said benchmark two-year mortgage rates had risen nearly 50 basis points since the beginning of September.
Reuters reported sterling at $1.3473, up 0.01%, after a six-session rally. The pound touched $1.35025 on Nov. 4, its highest since Sept. 15, before trading near $1.35 after the decision. Reuters described the hike as the Bank’s first in more than three years.
A pre-decision FXStreet report attributed a technical recovery view to Societe Generale strategists. It said GBP/USD had moved above its 200-day moving average as it rebounded from 1.3140–1.3200, the lower end of a multi-month range. FXStreet listed 1.3420 as support and 1.3555, 1.3600 and 1.3660 as separate resistance levels.
EconoTimes previously covered a separate United Overseas Bank outlook for sterling against the dollar. The Bank of England has scheduled its next Bank Rate decision for Dec. 17.
