Yahoo Finance Sterling jumps to post-Brexit high as Bank official hints on rate rise
Talk of an imminent rise in interest rates by a Bank of England official has pushed sterling to a one-year high against the dollar.
The pound surged on Friday morning to reach $1.3610, its highest point since July 24, the day after the Brexit vote.
Sterling also gained more than 1% against the euro to rise above €1.13.
In a speech on Friday, Monetary Policy Committee member Gertjan Vlieghe said that until recently he had believed that it was important to be patient about increasing rates, but that recent data was “increasingly suggesting that we are approaching the moment when base rate may need to rise”.
MORE: UK interest rates: what could an increase mean for British families and companies
Bank base rate is currently sat at 0.25%, a record low, having been cut from 0.5% in the aftermath of the Brexit vote. It had sat at the previous record low of 0.5% for more than seven years.
Vlieghe’s comments follow the Bank of England’s decision yesterday to hold the base rate, but with the clearest hints yet that a rate rise may be upon us.
The Bank said that the strengthening economy and rising inflation meant that “some withdrawal of monetary stimulus was likely to be appropriate over the coming months”. This week the Consumer Prices Index measurement of inflation hit 2.9%, its highest level in five years.
MORE: Low interest rates a bigger worry than Brexit for UK investors
The rate rise hints have boosted the pound, which has strengthened to its strongest level against the euro since July and in a year against the US dollar.
A rate rise would be good news for beleaguered savers, who have suffered from less than exciting interest rates in recent years, but would push mortgage repayments up for borrowers on variable rate deals.
