The cable is trying to inch above a major level of 1.70, moving to this mark for the first time since August 2009. The Sterling has benefited from greenback's weakness, while Mark Carney's comments of the sooner-than-expected rate hike fuelled investors' interest for the currency. At the same time, the Pound hit the highest level in 20 months versus the single currency. The appreciation versus both these currencies is expected to continue.
On Monday, BoE Deputy Governor Charlie Bean claimed that an increase in interest rates will be a clear indicator the economy is returning to normal. Bean pointed out that the economy is not in an emergency state, and in order to deal with adverse shocks the process of tightening is inevitable. Hawkish comments from the Governor and his Deputy have pushed investors to revise their bets on the first rate hike, pricing in a move by January compared with prior expectations for May. At the same time, Charlie Bean stressed out that the central bank is fighting with pressure to cool the housing boom, as the OECD is calling for action.
Another fact, which speaks in favour of long-term prosperity is a decision by the S&P credit rating agency to upgrade its credit outlook to "stable" from "negative", also keeping the assessment of borrowing strength at AAA.
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