The British pound extended its gains on the combination of broad dollar weakness and inflation fears. The Bank of England released the minutes from their monetary policy meeting earlier this month and according to the report, fears of inflation will keep the central bank on hold for the foreseeable future. Eight out of the nine members voted in favor of the decision to keep interest rates unchanged with the dissenter favoring a rate cut. With a strict mandate to focus on inflation and two members already voting to keep rates unchanged at the meeting prior, the near unanimous voting record was not all that surprising. Although the need to focus on inflation and the problems with price pressures is a sentiment shared by all of the MPC members, the internal outlook for growth varied. Some members felt that the economy is holding up well while others believed that a more serious downturn may be right around the corner. Either way, their hands are tied because consumer prices are already at their pain threshold of 3 percent. Retail sales and the CBI industrial trends survey are due for release tomorrow. If consumer spending falls for another month, the uptrend in the GBP/USD could come to an end.
