The pound pulled back from session lows against the dollar on Thursday after Bank of England Governor Mark Carney said the time for a rate hike is drawing closer, but added that the timing could not be predicted.
GBP/USD was last at 1.5521, off 0.51% for the day, up from session lows of 1.5468.
Sterling recovered some ground after Carney said it was his personal view that the decision on when to start to raise interest rates was likely to come into sharper relief at the turn of the year.
“The likely timing of the first bank rate increase is drawing closer. However the exact timing of the first move cannot be predicted in advance,” he said.
He also reiterated that interest rate increases will be “gradual and limited and added that the “path is more important than the timing of the first increase”.
The pound turned broadly lower earlier after the minutes of the BoE’s August meeting showed that just one monetary policy committee member voted in favor of a rate hike this month.
Eight members of the bank’s monetary policy committee were in favor of leaving the key interest rate at a record low of 0.5%. Ian McCafferty was the lone dissenter, voting for a quarter percent rate hike.
The minutes came as a surprise to market participants, who had expected two or possibly even three members of the MPC to back a rate increase this month.
It was the first time the minutes were published at the same time as the monthly monetary policy decision.
The minutes said the bank now expects inflation to remain at around zero for at least the next two months, before rising to its 2% target at the end of the two-year forecast period, if interest rates are increased in line with the market’s expectations.
“The near-term outlook for inflation is muted. The falls in energy prices of the past few months will continue to bear down on inflation at least until the middle of next year”, the bank said.
The pound also trimmed back losses against the euro, with EUR/GBP last up 0.29% to 0.7010, off highs of 0.7044.