Pound to euro exchange rate: Sterling rises as chance of 2017 interest rate hike grows | City & Business | Finance - World Big News

Pound to euro exchange rate: Sterling rises as chance of 2017 interest rate hike grows | City & Business | Finance

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Sterling hovered around 1.1343 against the euro and 1.2664 against the US dollar on Thursday morning, after it was given a shot yesterday by the Bank of England’s chief economist.

Andy Haldane suggested he could soon be ready to vote for an interest rate hike amid surging inflation and Britain’s stable economy. 

The comments were in stakr contrast to Governor Mark Carney who, earlier in the week, said now is not the time to raise rates.

Chris Beauchamp, chief market analyst at IG said: “A day after Mark Carney soothed nerves by declaring his unwillingness to raise rates, chief economist Andy Haldane chucked a spanner into the works by announcing that he thought the time was nearly upon us.

“Mr Haldane is one of the internal members of the MPC, and so his conversion from dove to hawk sent the pound flying higher, on expectations that others on the committee will follow his lead, boosting the hawkish caucus that was so surprisingly vocal last week.”

 

However, continued political uncertainty has dampened the pound’s rally, amid rising concerns that the Conservatives and DUP have still not made a deal. 

Lower oil prices, which take the wind out of inflation – and therefore the likelihood of an interest rate rise have also helped keep sterling’s rise in check.

More to follow…