The Pound (GBP) skyrocketed against the other majors on Thursday after hints from the Bank of England (BoE) that interest rates may be hiked in the near future caused markets to go into overdrive.
Adding to this was a speech by BoE Governor Mark Carney yesterday evening in which he declared that the possibility of a rate hike has ‘definitely increased’, suggesting that rates may be adjusted in the ‘coming months’.
The Pound was then further boosted this morning by a speech from BoE policymaker Gertjan Vlieghe. He is famously the most cautious member of the Monetary Policy Committee (MPC), yet even he has now stated an interest rate hike is coming.
The Pound Euro (GBP EUR) exchange rate surged by over a cent yesterday as investors rushed to Sterling in the wake of the latest BoE monetary policy meeting.
Meanwhile the latest trade balance figures from the Eurozone could prompt the single currency to stumble again this morning as economists forecast that it will have slipped in July.
Sterling struck a new one-year high against the US Dollar (USD) this morning, breaking past $1.34 on hopes that the BoE may soon begin tightening its monetary policy.
The jump in the Pound was also enough to overwhelm an uptick in US CPI figures yesterday as inflation jumped from 1.7% to 1.9% in August, prompting odds of a December rate hike from the Federal Reserve to climb.
Meanwhile expectations that today’s US data will disappoint is likely to cause the GBP USD exchange rate to climb even further this afternoon.
The Pound Canadian Dollar (GBP CAD) exchange rate climbed by over two cents on Thursday on hopes that a more upbeat BoE will lead to a rate hike in the near future, with a slight dip in oil prices also weakening the ‘Loonie’.
Sterling rallied to a two-month high against the Australian Dollar (AUD) yesterday as markets are confident that the BoE will soon vote to raise interest rates for the first time since 2007.
New Zealand Dollar
The Pound New Zealand Dollar (GBP NZD) exchange rate also posted significant gains on Thursday as, alongside the latest comments from the BoE, increased uncertainty around the upcoming general election in New Zealand has caused markets to shy away from the ‘Kiwi’.
This week the US Dollar was touching three-year highs when valued against a basket of major currencies. The greenback’s traditional role as one of the safe-haven currencies is helped by a domestic economy that is largely immune to the threats of the coronavirus.
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