Friday, 18 Feb 2011

Pound Continues to Bring Bids

The pound was stronger this morning as the currency pushed higher following speculation of rising interest rates and comments from BOE members.

BOE monetary policy committee member Andrew Sentance acknowledged that his opinion of tightening monetary policy was gaining ground amongst monetary policy committee members. Sentence's comments come on the back of new British CPI numbers that came in at 4% this week.

The Bank of England faces the challenge of fighting inflationary forces without sabotaging Britain's economic recovery. A premature increase to the interest rate would potentially slow the British economy as it continues to improve from the recent financial crisis.

At lunchtime during the European trading session, the GBP/USD was higher at 1.6228 after opening the day at 1.6174. The EUR/USD was trading up at 1.3625 from 1.3604. Spot crude oil was also higher at $89.46 from $88.86.

BOE Governor Mervyin King is scheduled to speak today and could shed some light on the BOE's current monetary policy and how the central bank will address rising inflation.

Speculation of higher future interest rates may bring further bids for the pound. Targets for the GBP/USD are the February high of 1.6230, followed by the November 2009 high at 1.6880.