The British pound is soundly back through the $1.40 mark today against its US counterpart after comments over the weekend by a BOE board member, and the release of strong data all but guarantee a rate hike in the nearest future.
Deputy governor from the Bank of England Dave Ramsden, who is one of the more hawkish members on the bank’s board, told the Sunday times over the weekend that he sees interest rates in the UK rising sooner than later, which has pushed market expectations to a 70 percent chance the BOE will lift rates in May.
“We all will keep a close eye on what happens through the early part of this year to see if that BOE forecast of wage growth picking up to 3 percent is realized,” noted Mr Ramsden
“But certainly relative to where I was, I see the case for rates rising somewhat sooner rather than somewhat later.” He added.
Adding more certainty to a rate hike was the release of key real estate data from the UK earlier today.
Mortgage approvals figures hit the market at 40.11k against analysts’ expectations for a figure of 35.92k and shows the fear of higher rates is not deterring home owners and investors alike.
The key for the pound this week are speeches due to be delivered by Prime Minister Theresa May on Friday, which follows opposition leader Jeremy Corban’s speech today, where both speakers will outline their stances regarding Brexit, and in particular the trade agreement following England’s departure from the EU.
“The upcoming speeches will be very much in focus for market participants who are still looking for more clarity on Brexit,” said Lee Hardman from MUFG in London.
“I’m not sure the uncertainty is going to clear enough in the coming week. It’s likely to hold back the pound in the near term.” he added.
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