Sterling surged broadly on Friday, hitting a 7-week high versus the yen and bounced off a record low versus the euro on speculation that a plan to ease mortgage market conditions would limit the scope of UK rate cuts.
Hawkish comments from Bank of England economist Charles Bean late on Thursday that British inflation is likely to rise above 3 percent this year also boosted sentiment towards sterling. A UK Treasury source said on Thursday that British authorities could announce details of a plan to ease tight conditions in the mortgage market as early as next week. Speculation has been growing that the BoE could allow banks to temporarily swap mortgage-backed securities for government bonds to help ease the lending squeeze.
Sterling jumped more than 2 percent against the yen to 208.20 yen, its highest since late February, while the euro lost 1.2 percent to hit a 2-week low at 78.86 pence, well off a record high of 80.98 pence hit earlier this week. Sterling was up 0.1 percent at $1.9928, having earlier hit a peak of $1.9997.
Comments
Comments are closed.