The Great Britain pound strengthened this week on the speculations that the Bank of England will be required to raise the interest rates to curb the growing inflation.
The BoE left its benchmark interest rates at the record low level of 0.5 percent on February 10. The bank keeps the stimulus to mitigate the effect of the budget cuts on the nation’s economy. Yet more and more policy makers voice concerns about such course of action and speak in favor of higher interest rates.
The letter of the Governor of BoE fueled the hopes for higher interest rates, boosting the sterling. Later the currency weakened as Governor explained that he doesn’t expect the interest hike in the near future. Yet the words of other policy makers suggested that such outlook isn’t universal. The growing inflation and the increasing retain sales also bolstered the pound.
GBP/USD showed the strong rally, slowing a little on Wednesday, but by the end of the week the currency pair rose from 1.6001 to 1.6233. EUR/GBP was very volatile, falling from 0.8446 to 0.8354 and then rebounding; the currency pair ended the week at 0.8429. GBP/JPY jumped from 133.54 to 134.88.
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