* Graphic: World FX Rates in 2020 tmsnrt.rs/2egbfVh
*Graphic: trade-weighted sterling since the Brexit vote tmsnrt.rs/2hwV9Hv
LONDON, October 11 (Businesshala) – The sterling euro after the Bank of England urged Britain to prepare for an earlier interest rate hike as inflationary pressures ease into the UK, in interviews published over the weekend by the Bank of England. And the dollar rose against both.
The bank’s governor, Andrew Bailey, said in an interview to The Yorkshire Post newspaper that inflation running above the BOE’s target of 2.0% was “very worrying” and had to be managed to prevent it from becoming permanently embedded.
Bank of England policymaker Michael Saunders said investors were right to bet on a sharp rise in borrowing costs, with consumer price inflation above 4%, the Telegraph newspaper said on Saturday.
Interest rate futures traded on the CME showed that November contracts were priced at a 20% chance of a rate hike next month compared to 12% last week, while December futures were pricing in a 45% chance of a rate hike by then. Was.
“There is currently strong speculation forming that the BoE will tighten ahead of the Fed,” said ING analysts, with the bank effectively warning of the effects of a second round from currently high inflation.
After touching a two-week high, sterling rose 0.2% versus the dollar to $1.3645 at 0750 GMT. Against the euro, it also rose 0.2% to 84.81 pence, not far from a two-month high in early morning trading.
The 2-year gilt yield hit 0.603% shortly after the market opened, the highest since January 2020, up 7 basis points on the day. (Reporting by Joyce Alves, Editing by Ed Osmond)