Pound Advances after Bank of England Hints Interest Rates May Be Increased Soon

0
129

Pound ends four day lossThe pound surged from its lowest level in nearly four months against the dollar after the Bank of England Governor Mark Carney said the high expectations of wage recovery may spur the central bank officials to raise interest rates.

The sterling rose 0.2 percent to trade at $1.6727 as of 4:13 in London after earlier declining to $1.6658 on August 14, its weakest level since April 8. The pound rallied 0.5 percent to trade at 79.90 pence per euro after earlier hitting 80.36 pence on August 14, its lowest level since June 12.

“Carney’s comments that the BOE would consider raising rates before real wages are growing sustainably and that there are a wide range of views on the MPC have been interpreted less dovishly,” Lee Hardman, a London-based foreign-exchange strategist at Bank of Tokyo-Mitsubishi UFJ Ltd, told Bloomberg News. “Recent pound weakness may prove only temporary, especially versus the euro.”

The pound rose after Carney told Sunday Times that BOE officials “don’t have to wait for the fact” to hike the target interest rate from an all-time low of 0.5 percent for the first time since 2009. Traders will get a much stronger hint when the Monetary Policy Committee minutes are published on August 20.

Yield on the 10-year gilt rose 0.1 percentage point or 10 basis points to 2.43 percent after declining to 2.32 percent, the weakest level since Aug. 2013. The 2.25 percent bond that matures in September 2023 fell 8.40 0.84 to 98.54.

The 10-year gilts yield advanced by the fastest pace since September on lower geopolitical pressures from Iraq to Ukraine lowered demand for safer assets. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com