Sterling soars after Bank of England drops hint of a rate hike

In comments that might draw the ire of Brexit supporters, who have previously accused Carney of being too critical of leaving the European Union, he said Britain was unlikely to immediately offset any loss of trade ties to its EU partners by striking new agreements with other countries. Brexit supporters say the freedom to strike new trade deals is one of the big advantages of leaving the European Union. “But the evolution of the data is increasingly suggesting that we are approaching the moment when Bank Rate may need to rise”. Diane James, an independent member of the European Parliament who was briefly leader elect of Britain’s anti-EU UKIP party, took aim at Carney.

Carney, making a speech at the International Monetary Fund’s Washington headquarters on Monday, said less openness to foreign markets and workers was likely to put upward pressure on inflation and reduce productivity, he said. Carney angered many Brexit supporters before last year’s referendum by saying leaving the European Union would probably hurt the economy.

While the Monetary Policy Committee (MPC) again voted to leave interest rates on hold this week the more hawkish tone struck by the BoE prompted speculation that the BoE may be planning to accelerate its plans for tightening monetary policy.

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.

However the Pound still had further to climb on Friday morning as historically dovish BoE policymaker Gertjan Vlieghe signalled that a rate hike was likely on the cards over the coming months, with most markets now expecting the MPC to vote for a rate hike in November to coincide with the BoE’s latest inflation report.

Prices have risen almost 3 percent – above the BoE’s 2 percent target – squeezing the spending power of many households and slowing growth in the overall economy.

The currency fell against most Group-of-10 currencies as Bank of England Governor Mark Carney said in Washington that global factors, which justify tightening soon, mean “monetary policy has to move in order to stand still”.

The Pound to South African Rand (GBP ZAR) exchange rate shot higher this week as the Bank of England (BoE) hinted that it was moving towards an interest rate hike.

GBP AUD Forecast: Carney to Speak This WeekLooking ahead a speech by Mark Carney on Monday could push the GBP AUD exchange rate even higher at the start of this week, with investors expecting to hear more about the BoE’s plans for monetary policy and whether markets can expect a rate hike by the end of the year.

The BoE’s next announcement on monetary policy is scheduled for November 2.

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