Interest Rates

Sterling falls as Bank of England remains divided

BoE votes 7-2 to keep interest rates on hold

Sterling fell sharply against the dollar on Wednesday morning with the minutes from Bank of England's (BoE) latest rate-setting meeting showing that members remain split on the future path of interest rates in the U.K.

Two members of the central bank's Monetary Policy Committee (MPC) again voted for an interest rate hike in October. Martin Weale and Ian McCafferty were the two to vote for the move, with the economists widely viewed as the most hawkish members at the central bank.

Both voted in favor of raising rates by 0.25 basis points, as they did back in August, according to minutes released on Wednesday morning.

Read More Bank of England chief sounds dovish note on rates

With the lack of change at the Bank, sterling sold off after the news with a drop to 1.6024 against the greenback after starting the session at 1.6110. Yields on the U.K.'s 10-year sovereign bond also eased.

Many economists are still expecting a rate rise at some point in 2015, although Ben Brettell, senior economist at Hargreaves Lansdown predicts that it will not happen until the latter part of the year.

"Given the deterioration we have seen in economic conditions, it is perhaps surprising they didn't cross the fence and join the majority voting to hold rates at 0.5 percent," he said in a research note.

"The minutes note 'little sign of future inflationary pressure' and indeed inflation is forecast to fall further in the coming months."

Geoff Caddick | AFP | Getty Images

The minutes come as some members, including BoE Governor Mark Carney, have sounded a more dovish note amid market turmoil and growth downgrades from organizations like the International Monetary Fund (IMF).

In an interview last week, Carney told CNBC that global weakness, lower inflation and troubles in European economies would influence policy at the bank's meeting next month. He signaled that recent negative growth numbers from Europe would be incorporated in the Bank's policy.

Read MoreBank of England chief economist says rates could stay lower for longer

On Friday, Bank of England chief economist Andy Haldane gave a fairly pessimistic speech about the U.K. economy saying that he was now more downbeat about the outlook for the economy.

"Put in rather plainer English, I am gloomier," Haldane said at a meeting of local business leaders in Kenilworth. "This implies interest rates could remain lower for longer, certainly than I had expected three months ago."