LONDON Aug 20 Sterling rallied on Wednesday,
recovering from four-month lows against the dollar, while gilt
futures fell after Bank of England minutes showed two
policymakers surprisingly voted for an interest rate hike in
Martin Weale and Ian McCafferty both unexpectedly voted to
start raising interest rates this month, becoming the first
officials to do so in more than three years. The voting
bolstered market expectations that the BoE could raise rates in
five months time.
After last week's Quarterly Inflation Report which was
perceived to be dovish by the market, expectations had been
pushed out to March.
Sterling rose to $1.6680, up 0.3 percent on the day
and bucked the broad dollar strengthening. It hit a four-month
low of 1.6602 earlier in the day.
The euro was down 0.5 percent at 79.69 pence,
hitting its lowest in a week. The euro had hit a two-month high
of 80.37 last week after the Inflation Report.
Gilt futures extend losses. The September contract
hit day's low of 112.48, down 50 ticks on day.
Britain's FTSE 100 equity index slightly extended
losses after the Bank of England minutes. The index had been
down by 0.3 percent before the minutes were published, but then
fell further to stand 0.4 percent lower by 0831 GMT.
(Reporting by Anirban Nag; Editing by Marius Zaharia)