Economy

Builders nurse wounds after sterling hits a high

Builders nurse wounds after sterling hits a high”

Britain's pound hit a 14-month high against the dollar on Friday and was heading for its best week in more than eight years on a trade-weighted basis, as traders stacked up bets on a near-term interest rate rise from the Bank of England. The bank kept rates at 0.25% this week, but hinted at a rise in the future, BBC reported.

Sterling has rocketed against the United States dollar in the biggest two-day rise since the referendum as war drums beat louder at the Bank of England, catching speculators badly off guard.

Yesterday, Mark Carney, who is the Governor of the BoE alluded to a increase in the United Kingdom interest rate in the next few months in order to deal with the inflationary pressures, and there is also talk of reigning in the current Quantitative Easing (QE) program. That was its highest level since June 24, the day after the Brexit vote.

Analysts have suggested the bank could lift interest rates back to 0.5%, the level they were before the European Union referendum, as soon as November. It extended those gains to $1.3450 on Friday, up half a percent on the day.

Vlieghe, who was the first bank member to vote for a rate cut after the Brexit vote, said there was now growing evidence the United Kingdom economy was picking up. Data this week showed prices rising faster and unemployment falling to a four-decade low.

This morning's intervention by Gertjan Vlieghe an external MPC member, is significant in that he is considered one of the more dovish members of the committee, and his assertion that a United Kingdom rate rise may well be needed in the coming months adds weight to the argument that the bank may act by the end of the year.



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