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You are here: Home / British Sterling / Sterling soars after Bank of England drops hint of a rate hike

Sterling soars after Bank of England drops hint of a rate hike

September 15, 2017 by Joe Wright

Sterling soars after Bank of England drops hint of a rate hike

The Pound has surged this week after a number of key comments from the Bank of England (BoE) have buoyed markets.

The Pound’s increase begun earlier this week after some higher than expected inflation figures gave those watching the Pound hope that the BoE would raise the subject of high inflation and how to deal with it.

The inflation figure of 2.9% was the joint highest out this year, as the last time this figure was reached was back in May. Since then the BoE has chosen to keep interest rates on hold for now, but there is the chance of a rate hike in just the next few months which is why we’re seeing the Pound soar and the buying of foreign currencies using Pounds become much less costly.

Yesterday, Mark Carney, who is the Governor of the BoE alluded to a increase in the UK interest rate in the next few months in order to deal with the inflationary pressures, and there is also talk of reigning in the current Quantitative Easing (QE) program.

The reason this has caused such a reaction from the Pound is because previously the plan was to raise interest rates in 2019, so markets are currently re-evaluating the Pound’s value and pricing in the rate hike as it seems like there could now be one this year.

The Pound is now trading at well over a 6-week high against the Euro, and against the US Dollar the Pound has hit a 1-year high, with the US Dollar coming under pressure at the same time the Pound has been boosted.

The Pound has been further boosted today after another BoE member, this time Gertjan Vlieghe, mentioned that the interest rate may need to be hiked more than once if the economy develops as expected.

Filed Under: British Sterling Tagged With: Bank of England (BoE), GBPEUR, GBPUSD, Gertjan Vlieghe, Inflation, interest rates, Quantitative Easing (QE), UK interest rate

The information on this website is provided for information purposes only. It does not constitute advice to any person on any matter. Every reasonable effort is made to ensure that the information is accurate and complete but we assume no responsibility for and offer no warranty with regard to the same.

About Joe Wright

Joseph Wright brings a wealth of experience on the currency markets. He has worked in a number leading financial services organisations over the last seven years - working within a range of products including foreign currency exchange, equities and derivatives.

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