Pound hits fresh high as traders bet on another interest rate hike
The pound is hitting new highs as traders bet on another rate hike as the Bank of England grapples with stubborn inflation
The pound reached new highs yesterday as traders continued to bet on another rate hike by the Bank of England at Thursday’s meeting.
Sterling rose to $1,266, its highest level in a year and contributed to gains last week.
Markets predicted that the UK central bank will have to keep raising interest rates because of stubbornly high inflation, currently at just over 10 percent.
Gains: British pound rose to $1,266, its highest level in a year, adding as markets predicted the UK central bank will have to keep raising interest rates
Continued pressure on consumer spending has led to speculation that the Bank will raise rates by another 0.25 percentage point to 4.5 percent this week.
Markets are also predicting that interest rates could peak at 5 percent later this year, increasing pressure on mortgage payers and borrowers.
Andrew Goodwin, chief UK economist at Oxford Economics, said the Bank of England could “correctly argue” that rates should rise further because of the UK’s “tight” labor market and “stubbornly high” inflation.
