Pound Extends Gains against Euro for Ninth Successive Day over Interest Rates Bets

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Pound Extends Gains against Euro for Ninth Successive Day over Interest Rates BetsThe pound gained for the ninth straight day versus the euro, rising to a 20-month high over bets that the Bank of England will hike interest rate soon.

The pound rose above the $1.70 mark for the first time since 2009 following remarks by the Bank of England Deputy Governor that higher interest rates would be an indicator that the economy was getting back into full health.

The sterling rose 0.1 percent to 79.84 pence a euro by 10.50 a.m. in London, a session that saw it briefly touch 79.59 pence, its highest level since October 1, 2012. The pound remained slightly unchanged at $1.6969 after earlier advancing to $1.7011, its strongest level since August 6, 2009. Last week, the British currency gained 1 percent, its fastest since the week through February 14 following comments by BoE Governor Mark Carney that interest rates may be increased sooner than the market expects.

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“We continue to be constructive on sterling, especially against the euro, where the monetary policy cycles are continuing to diverge,” Josh O’Byrne, a London-based foreign-exchange strategist at Citigroup Inc told Bloomberg. “Carney was more hawkish than expected and you saw an upward revision in rates markets. This morning we’ve seen rates tick up further still and the pound generally supported.”

The pound has advanced 9.3 percent over the past 12 months, making it the best performing currency out of the 10 advanced-economy currencies monitored by Bloomberg Correlation-Weighted Indexes. The dollar has gained 0.3 percent while the euro has rallied 1.8 percent.

Bank of England officials are expected to make public the minutes of their meeting held on June 4-5 on June 18. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Yashu Gola at yashu@forexminute.com