The Great Britain pound gained as Bank of England Governor Mervyn King was hawkish about the inflation, causing the speculation that the Bank may raise the interest rate soon.
King wrote in his letter to Chancellor George Osborne:
Inflation is likely to continue to pick up to somewhere between 4% and 5% over the next few months, appreciably higher than when I last wrote to you. That primarily reflects further pass through from recent increases in world commodity and energy prices.
The Governor explained the growth of the inflation by “the rise in VAT relative to a year ago, the continuing consequences of the fall in sterling in late 2007 and 2008, and recent increases in commodity prices, particularly energy prices”.
The surge of the inflation increases the probability of the interest rates hike by the BoE in the near future. The letter mentioned the possible risk of such move, but hasn’t ruled out it completely as the policy makers are divided in their opinion about the
GBP/USD went up from 1.6124 to 1.6161 as of 3:39 GMT after rising yesterday from 1.6036 to 1.6124. GBP/JPY rose from 135.06 to 135.29 today after it advanced from 133.62 to 135.05 yesterday.
If you have any questions, comments or opinions regarding the Great Britain Pound,
feel free to post them using the commentary form below.
