Pound hits highest since Brexit vote on rate rise speech

19th September 2017

Pound hits highest since Brexit vote on rate rise speech

The pound has hit its highest level against the dollar since the Brexit vote after a senior Bank of England official fuelled speculation it could raise rates in the coming months.

The Bank kept rates at 0.25% this week, but hinted at a rise in the future.

Sterling rose more than 1% against the dollar to hit $1.3610.

That was its highest level since 24 June, the day after the Brexit vote.

The pound also gained more than 1.1% against the euro to rise to 1.137 euros by Friday night.

Analysts have suggested the Bank could now lift interest rates back to 0.5%, the level they were before the EU referendum, as soon as November.

Markets which track investors’ expectations for the Bank rate now give a 63% likelihood of a rise in November, the highest since the Brexit vote. At the start of the week the futures markets gave only a 20% chance.

The return on government bonds, often influenced by interest rate expectations, also hit 15-month highs on Friday.

The yield on five-year UK bonds rose 7 basis points to hit 0.772%, the highest since 23 June 2016, the day Britain voted to leave the European Union.

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