Sterling surged higher across the board at the end of the week following a hawkish statement from the Bank of England (BoE).

The UK central bank left interest rates on hold at the record-low 0.25%, with policymakers voting 7-2 against raising borrowing costs at this juncture. However, traders piled into Sterling following the bank’s minutes report, which appeared to hint at a rate rise in November. Policymakers said that if the British economy maintained its current growth then ‘monetary policy could need to be tightened by a somewhat greater extent… than current market expectations’. It was also noted that a majority of bank officials believe ‘some withdrawal of monetary stimulus was likely to be appropriate over the coming months’.

The Pound soared across the board following the minutes as markets priced in a higher probability of a November rate hike.

Pound to Euro Exchange Rate Jumps 175 Pips on Hawkish BoE Bets

The Pound to Euro exchange rate rallied by around 175 pips to strike its highest level in almost two months, driven by bets that the Bank of England may be on the verge of raising interest rates for the first time in a decade.

After releasing minutes from the latest meeting, in which the BoE appeared to pave the way for a near-term tightening of monetary policy, Governor Mark Carney told reporters that the possibility of a rate hike has definitely increased and rates may need to rise in the coming months. Carney went on to add that the Pound’s recent depreciation was making UK prices higher and stated that there had been a ‘shift’ in the bank’s balancing act. The hawkish comments appeared to support the market interpretation that a November rate rise is on the cards.