The Pound Sterling has pushed higher against the US Dollar on growing expectations that the UK central bank will be raising interest rates when it meets later this week. FX traders have priced in a 90% chance for a BoE rate hike, according to the latest data. That is welcome news to Sterling traders who saw the pound hit a 10-month trough at the beginning of the month on diminished hopes of a favorable Brexit resolution. Analysts say that some traders are now also counting on another rate hike this year and, to that end, they believe that the Bank of England is showing some subtle signs in agreement.
As reported at 11:22 am (BST) in London, the GBP/USD was trading at $1.3156, a gain of 0.20%; the pair had earlier hit a trough of $1.3113 while the peak is at $1.3164. The EUR/GBP is trading at 0.89118 Pence, down 0.01%; the pair's low for the trading day is recorded at 0.89069 Pence while the session high is at 0.89277 Pence.
Experts Advise Caution
However, some strategists say that they are taking a more cautious approach and will curb their optimism until there is some validation for a possible second rate increase. The BoE statement from Governor Mark Carney after the policy decision should provide sound guidance. One London-based investment manager points out that the Brexit still looms much too large in the window and that there has been less flexibility in the balance sheet of the average UK household to warrant another upward rate adjustment.