FX.co ★ UK: strong sterling to make BoE increase interest rates

The national currency of the United Kingdom leaped against the U.S. dollar setting a new 6-year high. Such a surge was started off by the latest reports on strong macroeconomic data as well as the information on possible interest rates hike by the Bank of England. The sterling is growing rapidly not only versus the greenback alone. The British currency hovered at a 1.5-year high versus the euro. Investors started to buy the pound sterling after the PMI manufacturing index, which was the highest in 7 years, was out.
Besides, the construction activity in Great Britain also surprised experts on the upside. The promising statistics provided fresh impetus for the sterling exchange rate. Before dealing with the pound/euro pair, market participants take into account decisions the ECB comes to at a recent meeting.
Analysts believe that given the euro strength against the majors, Mario Draghi is likely to make some steps to depreciate the single currency. Previously, he had said that the currency strengthening amid the low inflation might be a cause for concern. Mark Carney, in its turn, has no doubt the BoE interest rates will be raised sooner than markets expect. Benchmark interest rates leave its mark on a currency value. Obviously, the British regulator is more than likely to make a move towards interest rates rise earlier than its European counterpart.