Pound-Dollar exchange rate: Sterling hits one-month high after Mark Carney hints at UK interest rate rise
The Bank of England Governor gave his clearest signal yet that an interest rate rise could be on the way
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Your support makes all the difference.The pound maintained its gains against the dollar on Thursday after jumping to a one-month high following Mark Carney’s comments hinting at an interest rate rise.
The Bank of England Governor gave his clearest signal yet that an interest rate rise could be on the way, saying on Wednesday that “some removal of monetary stimulus is likely to become necessary if the trade-off facing the [Monetary Policy Committee] continues to lessen."
Sterling was trading just below $1.30 on Thursday morning.
Some analysts believe the Bank could raise rates as soon as the August MPC meeting. MUFG currency analyst Lee Hardman said: “We believe that the majority on the MPC is closer to raising rates than widely assumed. The recent surprise signal from previous arch dove BoE Chief Economist Haldane that he is close to raising rates has highlighted that opinions on the MPC can change quickly.”
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The Bank of England's chief economist, Andy Haldane, surprised traders earlier this month by saying he was ready to raise rates, having previously positioned himself at the dovish end of the spectrum on rates. Mr Carney's and Mr Haldane's comments were interpreted as signalling a shift in the overall MPC orientation.
The MPC split 5-3 earlier this month over whether to raise rates from 0.25 per cent to 0.5 per cent.
In that vote the Governor and Mr Haldane both voted to hold. The three members in favour of a rate hike were Michael Saunders, Ian McCafferty and Kristin Forbes. Ms Forbes is leaving the MPC and will be replaced at the next meeting in August by Silvana Tenreyro.
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