Advertisement
UK markets closed
  • FTSE 100

    7,952.62
    +20.64 (+0.26%)
     
  • FTSE 250

    19,884.73
    +74.07 (+0.37%)
     
  • AIM

    743.26
    +1.15 (+0.15%)
     
  • GBP/EUR

    1.1689
    -0.0005 (-0.04%)
     
  • GBP/USD

    1.2614
    -0.0009 (-0.07%)
     
  • Bitcoin GBP

    55,697.95
    -377.56 (-0.67%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • S&P 500

    5,254.35
    +5.86 (+0.11%)
     
  • DOW

    39,807.37
    +47.29 (+0.12%)
     
  • CRUDE OIL

    83.11
    -0.06 (-0.07%)
     
  • GOLD FUTURES

    2,254.80
    +16.40 (+0.73%)
     
  • NIKKEI 225

    40,369.44
    +201.37 (+0.50%)
     
  • HANG SENG

    16,541.42
    +148.58 (+0.91%)
     
  • DAX

    18,492.49
    +15.40 (+0.08%)
     
  • CAC 40

    8,205.81
    +1.00 (+0.01%)
     

Sterling climbs before Bank of England inflation report

LONDON, Feb 12 (Reuters) - Sterling traded near its highest in seven years against the euro on Thursday, before a Bank of England inflation report that may sound upbeat about the outlook, suggesting the bank could raise rates earlier than markets currently expect.

The BoE will publish its quarterly report at 1030 GMT, with the vast majority of economists polled at the end of last month expecting the central bank to revise down its inflation projections after a dramatic fall in energy prices.

But in a speech in Dublin last month, BoE Governor Mark Carney said lower oil and food prices were "unambiguously positive" for Britain. In fact, the BoE could highlight upside risks to CPI (Other OTC: CPICQ - news) in the longer term, analysts said.

Investors are currently expecting the BoE to begin raising interest rates from their historic lows next February, having until last summer expected a rate hike early this year, or even in late 2014.

ADVERTISEMENT

Sterling edged up 0.2 percent against the dollar to trade at $1.5260. Against the euro, the pound was slightly stronger at 74.35 pence per euro, having hit a seven-year high of 73.85 pence on Wednesday.

"Markets are probably braced for a dovish quarterly Inflation Report from the BoE, leaving scope for sterling to benefit if the report sounds less concerned about short-term weakness in inflation. We remain short euro/sterling," BNP (Paris: FR0000131104 - news) Paribas said in a note.

Earlier data showed British house prices rose last month at their slowest annual pace since May 2013 and fell for a fifth month in London, according to an industry survey, suggesting doubts over the outcome of May's national election is crimping demand.

Investors are growing cautious about sterling assets ahead of a parliamentary election in May that could open the door to a referendum on Britain leaving the European Union. Traders said a number of hedge funds were taking bets against the pound in the run-up to the election. (Reporting by Anirban Nag; Editing by Hugh Lawson)