- John Longworth, director-general of the BCC
While the cable is facing a strong resistance around 1.68, the outlook for the pair is still bullish, as fundamental data from the U.K. are speaking in favour of further economic strengthening, adding to signs the first rate hike can be made this year already.
This week the British Chamber of Commerce said the economy will surpass its pre-crisis peak later this year, with sentiment in the private sector being at the highest level when compared to other advanced economies. Currently, the economy is 1.4% below its pre-recession peak, and according to latest projections, it will return to its pre-recession level in the second quarter of this year. A year ago, the BCC expected this level to be reached only in 2016. The BCC expected a 2.8% economic expansion this year, a forecast just 0.1% more optimistic than its earlier estimate. Moreover, the 2015 forecast was revised upwards as well, with GDP seen rising 2.5% from 2.4%. Regarding the BoE's future moves, the agency predicts the first rate hike to be made by the end of 2015, with central bank increasing its benchmark interest rate to 0.75%.
Another fact that speaks in favour of the rate hike, is an increase in real wages, as central bank tries to eliminate all the slack in the economy. Nevertheless, the recovery remains unbalanced until both exports and business investment pick up.
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