News of another interest rates hike contribute to GBP/USD appreciation


Sterling traded close to recent highs on Thursday evening, benefiting from an improvement in risk sentiment. The move higher in Sterling appears to be in relation to heightened expectations amongst investors that the Bank of England will opt for a 50 basis points interest rate hike next month. Whilst US economists continue to forecast a deceleration of the pace of monetary policy tightening from the Federal Reserve, the prospect of a higher interest rate in the UK is contributing to GBP/USD appreciation.

The British pound found an additional boost from reports that Chancellor Jeremy Hunt will announce reforms for the UK’s financial sector aiming to help ‘turbocharge’ growth by ripping up restrictive red tape and replacing a number of European regulations.

A new concern for Sterling investors follows a Bloomberg report which shows property rental prices increasing at twice the pace of wages. According to the data, the cost of a new rental agreement rose 12.1% over twelve months whilst wages grew 6% in the three months since September.

Key announcements

15:00 – USD – Michigan Consumer Sentiment Index (Dec)