The pound strengthened to a seven-week high against the dollar after Bank of England Governor Mark Carney reiterated policy makers’ commitment to bring down inflation, fueling speculation interest rates will rise.
Sterling was within 0.4 percent of the strongest in a month versus the euro as Carney said on BBC Radio 4’s “Today” program that “without question” inflation at 2 percent is the target. The pound jumped 0.9 percent against the dollar yesterday as the central bank’s Inflation Report and review of forward guidance fueled speculation the outlook for growth and inflation will prevent it from keeping borrowing costs at a record low. U.K. government bonds were little changed.
“Carney has emphasized that inflation is the primary target,” said Thu Lan Nguyen, a currency strategist at Commerzbank AG in Frankfurt. “The market now that it has more clarity about monetary policy, it can factor in the recently better-than-expected economic data from the U.K.”
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