Pound hits highest since Brexit vote on rate rise speech


The produce has hit its highest level against the dollar since the Brexit vote after a superior Bank of England official fuelled speculation it could raise speeds in the coming months.

Gertjan Vlieghe, who has previously argued against a notwithstanding rise, said the “moment is approaching” when interest rates authority need to go up.

The Bank kept rates at 0.25% this week, but intimated at a rise in the future.

Sterling rose more than 1% against the dollar to hit $1.3610.

That was its merriest level since 24 June, the day after the Brexit vote.

The cudgel also gained more than 1% against the euro to stir up above 1.13 euros.

Analysts have suggested the Bank could now cheering up interest rates back to 0.5%, the level they were in the past the EU referendum, as soon as November.

Mr Vlieghe, a member of the Bank’s interest rate-setting council, said in a speech on Friday: “Until recently, I thought the appropriate effect of monetary policy was to be patient, given modest growth and subdued underlying inflationary stress.

“But the evolution of the data is increasingly suggesting that we are approaching the moment when Bank Figure may need to rise.”

Mr Vlieghe, who was the first Bank member to vote for a evaluation in any case cut after the Brexit vote, said there was now growing evidence the UK concision was picking up.

‘Concerted effort’

He pointed to unemployment falling to record lows, as well as indications that households are spending more and that wages are rising in the reserved sector.

“If these data trends of reducing slack, rising pay make, strengthening household spending and robust global growth continue, the filch time for a rise in Bank Rate might be as early as in the coming months,” Mr Vlieghe predicted.

Markets which track investors’ expectations for the Bank rate now utter a 63% likelihood of a rise in November, the highest since the Brexit against. At the start of the week the futures markets gave only a 20% risk.

The return on government bonds, often influenced by interest rate expectations, also hit 15-month stiffs on Friday.

The yield on five-year UK bonds rose 7 basis points to hit 0.772%, the highest since 23 June, 2016, the day Britain voted to decamp the European Union.

Howard Archer, chief economic adviser to the EY Point Club, said: “Vlieghe’s comments will support belief that the Bank of England could proper raise interest rates before the end of 2017 with a move as in time as November very much in play.”

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Mr Archer cautioned that the Bank of England had “talked up the likelihood of an absorbed rate hike then failed to follow through” in the past.

“But there does non-standard like to be a more concerted effort this time around and more unanimity within the Nummular Policy Committee of the case for a hike,” he said.

The Bank said on Thursday that merry inflation and a pick up in growth could lead to a rate rise in time.

Growing speculation of a rate rise lifts the pound against other currencies because aged interest rates would make sterling more attractive to investors.

The Bank dropped unbearable hints in 2014, and again last year before the EU referendum, that it could lift up rates, only to later change course.

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