LONDON: Sterling extended its rise on Thursday after the Bank of England said two of its policymakers had voted for an early end to pandemic-era government bond buying.

The pound was last up 0.6% at $1.3708 after trading around $1.3686 before the BoE announcement.

Against the euro sterling also rallied further and was last at 85.52 pence, 0.4% stronger on the session.

The BoE, as expected, kept its main interest rate unchanged at 0.1% and stuck to its 895 billion pound ($1.22 trillion) asset purchase target. Economists polled by Reuters had expected no change to the BoE's main policy settings after its September Monetary Policy Committee meeting.

Policymakers voted unanimously to leave rates unchanged but Dave Ramsden joined Michael Saunders in voting for an early end to the central bank's programme of government bond purchases.

Sterling pinned at one-month lows before central bank meeting

"The 7-2 vote is the beginning of a shift towards higher rates & boosts the chances that QE (quantitative easing) ends earlier than expected," said Neil Jones, London-based head of FX Sales for Financial Institutions.

"The text comments are looking more hawkish in mind. We should continue to see further pound strength across the board & in increase in the chance of rate hike."

Ahead of the BoE decision, the pound had already traded higher on easing concerns about the Evergrande debt crisis -- panic that Chinese developer Evergrande would default on its debts this week sent investors into safer assets and currencies.

Ahead of Thursday's BoE meeting and after higher-than-expected inflation numbers earlier this month, markets have brought forward expectations for a rate hike from the record 0.1% low.

Markets are now pricing in more than 15 bps of rate rises by May next year.