British Pound to US Dollar (GBP/USD) Exchange Rate Near Five-Year High
The British Pound has been victorious against the US Dollar today, achieving an almost five-year high against its North American rival and taking its twelve month gain to 9%.
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Bank of England Governor Mark Carney gave a speech at London’s Mansion House Dinner in which he commented on the prospect of raising Britain’s interest rates; he suggested ‘it could happen sooner than markets currently expect,’ instilling more faith in the UK’s economic recovery and boosting the Pound Sterling exchange rate.
So far Britain’s figures for 2014 are showing positive results, with more expected to follow.
Industrial production has risen swiftly in 2014 and unemployment has fallen markedly.
Carney’s speech has confirmed previous suspicions voiced by various financial institutions regarding the likelihood of an interest rate increase occurring before next March.
An expert in the field, Michael Sneyd, comments on the impact of Carney’s speech: ‘Carney has helped deliver a repricing of the market. Even from here there is more room for the market to bring forward rate hiking. We continue to like the Pound.’
Sterling swiftly propelled itself forward following Carney’s speech, and the question of when the interest increase will happen became ever more prominent.
Lloyds Bank specialists have said: ‘Carney’s comments at the Mansion house indicating that UK rates could rise sooner than the markets expect propelled GBP sharply higher through the 0.80 level in EUR/GBP and within touching distance of the 1.70 level in GBP/USD.’
However if the rise in interest rates is deemed to have occurred too early it could hinder the economic recovery and cause household debt to increase too much, which would throw up a whole new set of problems.
Lloyds also commented: ‘While Carney provided no detail of how soon rates could rise, it was unlikely that he would have made such a bold statement without a real possibility that rates could rise this year. From here, the 1.70 level is the next target and seems likely to break today.’
With results being released next Tuesday, June 17 regarding Britain’s consumer and retail price index, the hope is that the Pound will continue to strengthen.
This week the Pound has particularly reinforced itself against the Euro, US Dollar, and the Australian Dollar.
The current British Pound exchange rates stand at: GBP/EUR – 1.2525, GBP/USD – 1.6954, and GBP/AUD – 1.8076 (as of 15:30 GMT).