Pound jumps as BoE hints at rate rise in May
The British pound passed $1.42 this afternoon following the Bank of England’s decision to keep interest rates on hold, yet with hints of a rise later this year.
For the time being, Britain’s central bank is keeping interest rates at 0.5%, and confirmation of the bank’s decision encouraged sterling to appreciate further, continuing a recent rally on the back of progress in the country’s Brexit negotiations with the EU. Sterling’s seven-week high against the dollar, shortly after noon on Wednesday, came as two members of the bank surprised investors by calling for a rate increase.
The BoE voted by 7-2 to leave rates on hold. However, lawmakers Ian McCafferty and Michael Saunders said economic conditions meant that time was ripe for rates to increase, prompting speculation that a rise will be on the cards in May this year. A hike in interest rates would be only the second raise since the financial crisis 10 years ago.
Against the dollar, sterling was worth $1.414 at the time of writing.