The pound was up against all major currencies on Monday, boosted by hints from a top Bank of England official that interest rates won’t be cut in the near future.
Policy maker Martin Weale said he gives “little weight is the argument that early action is needed to reassure people,” according to Reuters. In a speech at the Resolution Foundation think tank Weale said: “In contrast to the experience of 2008, I do not have any sense that either consumers or businesses are panic-struck.”
The Bank of England was widely expected to cut interest rates last week in response to the UK’ surprise decision to leave the European Union, which sent the pound falling to a 31-year low and is widely expected to push Britain into recession.
But the central bank surprised the markets by holding the headline interest rate unchanged at a record low of 0.5% for the 88th month in a row.
Weale said on Monday, as per the Reuters report: “This uncertainty points to the argument that we should wait for firmer evidence before making any policy change.”
“For there to be a case for easing policy I will need to expect weakness in output to be large enough more than to compensate for any overshoot in inflation.”
A cut in interest rates would mean less earning potential for sterling so the signal that they may not fall for a while yet has boosted the pound. Here’s how it look against the major currency pairs at just after 11 a.m. BST (6.00 a.m. ET):
Pound/US dollar — +0.39%
Pound/Euro — +0.30%
Pound/Japanese yen — +0.90%
Pound/Australian dollar — +0.14%
Pound/Swiss franc — +0.52%
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