Pound gains on hawkish comments from BOE chief

The Pound began Thursday’s trading session on the front foot following hawkish comments from Bank of England policymaker Ian McCafferty.

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The BoE official said that he has not changed his position on interest rates since the last meeting in June, when he voted for a 25 basis point rise. McCafferty added that the central bank should also consider unwinding its £435 billion quantitative easing scheme soon. McCafferty, easily one of the most hawkish members of the monetary policy committee, argued that the bank’s mammoth balance sheet should be unwound in the near future. The BoE had previously stated that it would hold onto the assets until interest rates reach 2.0%.

Sterling rose against some of the majors following McCafferty’s hawkish remarks.

Pound to Euro Exchange Rate Rallies 60 Pips

The Pound to Euro exchange rate continued to rebound from the eight-month lows struck earlier in the week yesterday, rallying by around 60 pips on the day.

Sterling received a shot in the arm following BoE official Ian McCafferty’s comments, which seemed to signal that he would be voting for higher rates in August. However, market bets for a rate hike next month currently stand at just 14%, down from around 25% last week. The median consensus suggests that policymakers will once again vote 5-3 against tightening policy.

The only major European ecostat of the day showed that German consumer prices remained below target at 1.6% in June. The print had little impact on demand for the single currency.

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