What is interesting is that this particular member, Gertjan Vliegh, is considered to be a ‘dove’ which means he has been pushing for rates to stay on hold. The fact that more MPC members are now leaning towards an interest rate hike has helped the Pound.
Currency markets move more on rumour than fact, so an interest rate hike is now being priced into the value of Sterling and that’s why the Pound has risen so much. The graph below shows how Pound/Euro rates have risen over the last few weeks:
Pound/Dollar rates are now sitting at $1.35+ which is back to the level it was at just after the EU Referendum last June. Again Sterling strength is much of the reason for the gain. GBPUSD has risen higher than GBPEUR because the USD is also weak helping to make it cheaper to buy.
With Pound/Euro at a 2 month high, and Pound/Dollar at a 15 month high, those that need to convert Pounds to a foreign currency may wish to take advantage of the recent gains. Some clients have been asking if they should wait for the rate hike to see if exchange rates rise further, however as mentioned above, I think this hike is now largely priced into rates already so it may be that even when it comes, it won’t affect the rate that much.