Forex - Sterling Higher as BoE Says Rates Could Rise Within Months

The pound rose against the other major currencies on Thursday after the Bank of England indicated that interest rates could rise faster than markets expect amid accelerating inflation.

GBP/USD was up 0.75% to 1.3307 by 07:20 AM ET (11:21 GMT), not far from Wednesday’s one-year high from around 1.3203 ahead of the announcement.

The BoE’s monetary policy committee voted 7-to-2 to leave interest rates at their current record low of 0.25% following its policy meeting.

But the bank said in its rate statement that the economy is looking slightly stronger than expected, adding that a majority of officials believe borrowing costs will need to rise in the coming months to bring annual inflation back to its 2% goal.

Such a move is likely “over the coming months,” the statement said if the economy performs broadly in line with officials’ expectations.

Sterling was also higher against the euro, with EUR/GBP down 0.81% to 0.9824 from around 0.9014 earlier.