LONDON – The pound continues to climb on Friday and has reached its highest level against the dollar since last summer’s Brexit referendum after the Bank of England’s Gertjan Vlieghe – probably its most dovish policymaker – said a rate hike could come in “months.”
Speaking at the annual conference of the Society of Business Economists, Vlieghe said that if the current “data trends of reducing slack, rising pay pressure, strengthening household spending and robust global growth” continue as they are, the bank could raise rates in the short term.
The pound had already rallied on Friday morning, but Vlieghe’s comments gave sterling even further impetus, and by 10.30 a.m. BST (5.30 a.m. ET) the currency is up by more than 1.1% to trade at 1.3550 against the dollar, as the chart shows:
- Markets Insider
On Thursday, Britain’s central bank kept rates at a record-low 0.25% but strongly signalled that markets are underestimating the potential for an increase in interest rates in the coming months.
The bank’s Monetary Policy Committee said that “some withdrawal of monetary stimulus is likely to be appropriate over the coming months in order to return inflation sustainably to target.” In central bank-ese, that’s as pretty clear of a hint as it gets.
The pound took off on Thursday afternoon as a result, eventually ending the day 1.4% higher against the dollar.