GBP/USD Up Slightly to 1.5650 after BOE Comments

The pound rose for a second day against the euro after the Bank of England said households in Britain can withstand a gradual increase in interest rates as the economy recovers.

Sterling climbed for the first time in three days against the dollar, advancing from a 15-month low. U.K. government bonds rose with their German peers as European Central Bank Governing Council member Ewald Nowotny said officials are discussing more stimulus for the euro area. The Debt Management Office is to sell 30-year bonds tomorrow. Dec. 5 data showed U.S. job growth in November beat analyst predictions, supporting the case for the Federal Reserve to consider raising borrowing costs.

“If you take the dollar as being the pre-eminent currency, then if you are looking who’s next best, the U.K. has some merits,” said Jeremy Stretch, head of foreign-exchange strategy at Canadian Imperial Bank of Commerce in London. “The market could have got a little too complacent with regard to monetary policy inertia but ultimately the underlying growth dynamics are still relatively constructive.”

Bloomberg

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