FXStreet (Barcelona) - Jonathan Pryor, Corporate Treasury Analyst at Investec, underlines the strength of the sterling bolstered by prospects of a rate hike by the BoE sooner than expected.
"After Friday's relief rally in the euro failing to see EURUSD reach above its first major resistance level of 1.3680, the market took the opportunity yesterday to sell euro’s and the single currency slowly drifted off all day. EURUSD traded from 1.3660 down to the 1.3580s this morning, while GBPEUR has rallied back towards 1.2370, just shy of Thursday's highs of 1.2400 which were triggered by the European Central Bank’s interest rate cuts."
"GBPUSD continues to sway around in the middle of its range waiting for a catalyst to set direction - and many are starting to believe that direction is up as Bank of England policy makers begin to wheel out a more hawkish rhetoric and open the path for an earlier rate rise if needed, as Bank of England official Ian McCafferty did yesterday".
"The current Monetary Policy Committee voting member said yesterday the UK economy still has scope to expand further before interest rates will need to rise, but the timing of the first increase is drawing nearer, "What we have said is the time when it becomes appropriate for interest rates in the UK to start to rise back to a more normal level is approaching," he added, "we think there is scope for the economy to grow a little further before we get to that point." Investors expect the Bank to begin raising rates early in 2015, although so far they have signalled the first rate rise will likely be later in the year."