The British Pound Sterling soared for the third day running against the dollar on Friday, March 17, for the first time since mid-January.
Short sterling futures for next March have shifted by six basis points since the bank’s statement on Wednesday and now price in a single rise in interest rates over the next 12 months.
Minutes from the Bank’s latest Monetary Policy Committee meeting shocked markets on Thursday by showing one outgoing official voting for a rise in rates and others on the verge of doing so if inflation gets much higher.
That seemed incongruous after a month where the hard numbers have finally begun to point to a weakening of economic growth as consumers face the effect of a 20 percent fall in the pound, a weaker housing market and uncertainty over jobs and investment as the government gets ready to launch Brexit talks.
Analysts said the turn away from the support the bank gave the economy with a cut in rates last August was probably chiefly due to the need to avoid another sharp fall in the pound.
That should offer the pound some support as it heads into a period of renewed political pressure when Brexit talks start next month.
A number of major banks have forecast sterling will fall below $1.20 in the months ahead, but helped by the BoE, it has this week ridden out political noise around a new Scottish independence referendum and the risks of a poor Brexit deal.
China’s yuan slips on dollar demand, but heads for best week in two month. It traded 0.3 percent higher on Friday at $1.2395 and 86.89 pence per euro respectively.
