Pound jumps on Carney remarks about timing of rate hike
FRANKFURT — The British pound rose sharply Wednesday after the country’s top central banker pondered the prospect of higher interest rates, a day after his counterpart at the European Central Bank sent the euro soaring with a relatively rosy economic assessment of the 19-country eurozone.
The big moves in the currency markets show the extent to which traders are on alert for anything that may signal that the two banks will join the Federal Reserve in bringing an end to the stimulus measures that were put in place after the financial crisis and the ensuing Great Recession.
The pound was in focus Wednesday, enjoying one of its best days since last year’s vote to leave the European Union after Mark Carney, the Bank of England governor, made remarks that could be seen as bringing an interest-rate increase closer. Higher interest rates relative to other currencies can send an exchange rate higher by increasing demand for fixed-income investments in that currency.
The pound rose around a cent, or 0.9 per cent higher, to trade at $1.2934. Against the euro, it was 0.5 per cent firmer at 1.1136 euros.