Sterling heads for best week in 8 years

  • Sterling heads for best week in 8 years

Sterling heads for best week in 8 years

But the Bank gave its strongest signal yet that a rate hike is on the horizon as it said all policymakers believed "some withdrawal of monetary stimulus was likely to be appropriate over the coming months".

"In the run up to the BOE meeting a lot of commentators focused on the report that the rate of inflation rose to 2.9 pct in August".

Previously the BOE had said they were willing to tolerate an inflation overshoot due to the weak Pound but it appears that after revising up their inflation expectations to 3.0% the limit of their toleration has been reached.

Sterling strengthened by more than 1.6 percent on the day to hit $1.3616, its highest since June 24, 2016.

UK's pound touched its 14-month high against the dollar on Friday and was on track to hit its best week in over eight years on a trade weighted basis while traders ratcheted up speculations on a near term interest rate hike from the Bank of England.

The BOE's rate-setting Monetary Policy Committee (MPC) voted 7-2 to retain the 0.25 percent rate, set last August as a policy response to stimulate the British economy in the wake of the Brexit vote and to counter the prospects of ensuing economic uncertainty.

Bank base rate is now sat at 0.25%, a record low, having been cut from 0.5% in the aftermath of the Brexit vote.

The next round of Brexit talks with the European Union has been postponed by a week until September 25.BoE Governor Mark Carney is due to speak in Washington on Monday.After hitting an nearly 2-month high of 87.75 pence per euro on Vlieghe's comments, sterling settled to trade around the 88 pence mark, up 1 percent on the day.

Sterling was boosted even further on Thursday evening, when BoE Governor Mark Carney surprised markets with comments that interest rates may even need to rise in the coming months.

The Bank reiterated that rates may need to rise by more than expected in financial markets.

Having surged to the best exchange rate since mid-July yesterday, the Pound to Euro rate has remained high today thanks to continued trader optimism.

"We'll take that decision based on the data but, yes, that possibility has definitely increased". He adds: 'We know rates have got to go up at some point in the near future but Britain's transition from a low interest rate environment, which has seen an entire generation grow up unable to earn anything other than paltry interest on savings, is taking an achingly long time. At the beginning of this week they were at 0.18%, a significant shakeout in the interest rate markets.

The minutes also stressed that there were accumulating signs that "slack" in the economy is being rapidly eroded, which could put additional upward pressure on domestic prices.

Get up to 5% more foreign exchange by using a specialist provider by getting closer to the real market rate and avoid the gaping spreads charged by your bank for worldwide payments.