GBP up as Focus Falls on BOE
|Published: ||7 Feb at 10 AM|
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Speculation as to when rather than if the Bank of England will raise interest rates gathered pace, and the support of investors during the early trading session this morning after a report in the Sunday Times fuelled the rumour mill.
Sterling rose against both the US Dollar and Euro, hitting a 3 week high on the latter after it was reported that a â€śshadowâ€ť monetary policy committee voted to lift rates.
The official decision will not be announced until Thursday and while it is widely expected to keep the bank rate unchanged at 0.5% and maintain its asset buying programme, markets are fully pricing in a rate hike by May.
Following the Sunday Times report the pound was firmly placed in the shop window, and although the shadow committee does not wield any real influence, the make up of economists from the Institute for Economic Affairs think tank has given sterling some support to start the week with.
The US Dollar rose against the euro on Friday after some better than expected Non-Farm Payrolls data. This helped push US yields and had markets pricing in a two in three chance of a US rate hike by the end of 2011, up from one in three a week ago.\r\n\r\nInvestors now look to see whether the US Dollar could extend these gains this week.
We will have more on the Bank of England as the week progresses.