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Sterling remains up against the dollar

STERLING has notched up a third consecutive week of gains against the US dollar, holding above $1.70 in the latest session.

The pound has been buoyed recently by increasing speculation that the first rise in UK base rates could come by the year-end, and it climbed through the $1.70 mark on Monday for the first time since August 2009.

Although sterling was at 5pm yesterday trading about 0.3 cents below its Thursday evening level, at $1.7014, it was up more than half-a-cent from $1.6953 a week earlier.

The pound has been given a major boost by a speech on June 12 from Mark Carney at London's Mansion House, at which the Bank of England Governor said the first rate rise "could happen sooner than markets currently expect" and warned the housing market was showing potential to overheat.

UK base rates have been at a record low of 0.5 per cent since March 2009.

Jonathan Loynes, at consultancy Capital Economics, observed yesterday that the trickle of warnings of not-too-distant policy tightening from the Bank's Monetary Policy Committee had this week "turned into something more closely resembling a flood".

He added: "The minutes of June's MPC meeting and speeches from new chief economist Andy Haldane and external committee members Martin Weale and Ian McCafferty all echoed the message from Mark Carney's...speech that interest rates might rise a bit sooner than the markets have been anticipating.

"The sheer number of similar statements in such a short period makes it hard not to detect a deliberate, co-ordinated attempt to alter market expectations."

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