Good Morning. Sterling has risen this morning in the wake of comments from Bank of England policy board member yesterday. Andrew Sentance said it may be difficult to keep inflation on target if import and services prices keep rising. These comments seem to increase the chances of an interest rate hike in the UK.
With higher interest rates, Sterling becomes more attractive to investors and the increased demand in anticipation of higher rates is what has caused the pound to gain this morning.
He added that the economy, now officially out of recession (just!), was facing opposing pressures which the central bank would have to consider in its Inflation Report next month.
The market took the comments to suggest an imminent end to the BoE’s 200 billion pound asset-buying plan, but analysts said they did little to change the view that interest rate rises will not follow until the second half of the year at the earliest.
Sterling to Euro
Rates have climbed due to the reasons above, and also due to concerns over the fiscal health of Greece and other euro zone countries. This has weakened the Euro, making it cheaper to purchase, and combined with Sterling strength, rates are 1.1585 at the tome of writing, which is by far the best levels since summer last year.
Given the fragile nature of the UK recovery, coupled with the huge debt levels we have, it’s likely that the gains we’ve seen over the last few weeks will not be sustained. Therefore, if you wish to take advantage of the best rates for many months, then contact us today by clicking the links below to register a free trading facility. You can then have a free consultation on the tools we have available to help you achieve the best possible rate, and protect yourself from a downturn in rates.
Sterling to US Dollar
The Federal Reserve left interest rates unchanged at their range of between zero and 0.25%, although one committee member voted a