Pound Jumps after BOE Officials Vote for Interest Rate Increase

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Pound Jumps after BOE Officials Vote for Interest Rate IncreaseThe pound surged for the second day versus the dollar after minutes of the Bank of England’s latest policy gathering indicated that two policy makers for the second month to increase interest rates.

The U.K. currency also advanced ahead of Scotland’s vote for independence tomorrow. The sterling rose 0.3 percent to trade at $1.6319 as of 4:21 p.m. in London after earlier rising to $1.6358, the strongest since Sept. 4. The pound jumped 0.3 percent to 79.37 pence per euro.

“It doesn’t sound like there’s much new in the minutes today,” Oliver Harvey, a London-based foreign-exchange strategist at Deutsche Bank AG told Bloomberg News. “If they did hike in spring next year they’d be the first low-yielding central bank to hike so that should be broadly supportive of the pound. But clearly the focus at the moment is going to be on Scotland.”

U.K. unemployment rate, as calculated using International Labour Organization’s approach, fell to 6.2 percent in the quarter through July, compared with the three months through June. The jobless rate is the lowest since November 2008. Basic pay grew 0.7 percent on an annual basis in the three months through July, equaling a record low.

The BOE retained its benchmark interest rate at 0.5 percent during its Sept. 3-4 meeting, with Governor Mark Carney saying interest rates may go up in the first six months of 2015.

Yield on the 10-year gilt stood at 2.52 percent. The price of the 2.75 percent bond that matures in September 2024 stood at 102.015 of the face value. 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