Sterling rose against the dollar and the euro after monetary policy committee (MPC) minutes for February showed a more hawkish outlook than expected.
Sterling jumped around half a US cent to trade at $1.6275, its highest since 3 February, after the Bank revealed a 6-3 split of members in favour of raising interest rates.
Spencer Dale, the Bank's chief economist, became the third MPC member to vote for a rate increase of 25 basis points, along with Martin Weale. Meanwhile, super-hawk Andrew Sentance called for a 0.5% rise.
Less than an hour later, sterling traded back at levels seen ahead of the minutes, up 0.5% to $1.6217.
Sterling was up 0.2% to £0.8444 against the euro and stood 0.6% higher at Y134.18.
The FTSE 100 index marginally extended falls after the BoE minutes, down 0.8% on the news, before picking up slightly to be down 0.67% by 11.30am.
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