The presence of a lone hawk and a note of concern over inflation on the Bank of England’s rate-setting committee this month has given sterling a boost.
Outgoing rate setter Kristin Forbes voted to raise rates, while minutes of the MPC meeting stated that “some members noted that it would take relatively little further upside news on the prospects of activity or inflation for them to consider that a more immediate reduction in policy support might be warranted.”
At publication time, the UK currency is up by 0.5 per cent on the day, reversing earlier losses, to reach $1.2350.
Investors also sold gilts after the decision, with the prospect of higher inflation and a rate increase lowering prices. Yields on the government’s benchmark 10-year debt, which rise when prices fall, were up 6.5 basis points (0.65 percentage points) at publication time, to 1.276 per cent.