Sterling strengthens as UK interest rate hike nears

Sterling surged on Thursday – pushing to the highest levels in over 7-years versus the euro as speculation mounted that an interest could be near in the UK.

This positivity came in spite of some weak data in the UK with inflation falling to 0% for June and unemployment in the UK rising for the first time in 2-years.

Throughout this week the value of the pound has been in line with the Greek debt crisis – with sterling strengthening as uncertainty continued; from the worries that the Greek government would not come to a conclusion, to the decision late on Wednesday by Tsipras’s government to take on austerity measures in order to aid the Greek economy moving forwards. Despite the Greek Parliament voting in favour of the necessary reforms, the euro did not strengthen as many had been anticipating.

Sterling’s strength came as comments from the Governor of the Bank of England highlighted that the time for an interest rate hike was getting closer and resultantly, speculation grew that interest rates could be hiked in the first quarter of 2016, or even as soon as this year.