The central bank kept rates at a record-low 0.25% on Thursday but strongly signalled that markets are underestimating the potential for an increase in interest rates in the coming months.
The bank’s Monetary Policy Committee said that “some withdrawal of monetary stimulus is likely to be appropriate over the coming months in order to return inflation sustainably to target.” In central bank-ese, that’s as pretty clear of a hint as it gets.
The pound took off on Thursday afternoon as a result, eventually ending the day 1.4% higher against the dollar. That rise has continued on Friday morning, with sterling passing above $US1.34 for the first time since September 2016.
Here is how the currency looks by around 9.15 a.m. BST (4.15 a.m. ET):
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