The British currency rose to a two-week high once morest the euro, brushing the symbolic threshold of 1.20 euro for one pound.
The pound sterling accelerated sharply on Thursday once morest the euro and the dollar, once morest the backdrop of monetary normalization in the United Kingdom, while the yen and franc benefited from a deterioration of the Ukrainian crisis.
The British currency rose to a two-week high once morest the euro, brushing the symbolic threshold of 1.20 euro for one pound.
The pound was helped, according to Christopher Vecchio, analyst for the specialized site DailyFX, by a series of macroeconomic indicators showing the good health of the British economy, but also a high level of inflation.
“We went all out on expectations of a rate hike in March, another in May, and maybe another in June,” commented the analyst.
Such a scenario would be equivalent to five consecutive hikes in as many meetings of the Bank of England’s (BoE) monetary policy committee.
The BoE has already made two hikes in December and February.
Operators estimate a 72.5% probability of a fourth consecutive increase in May.
The Bank of England “took the lead of the major central banks” to start this new cycle of monetary normalization at the end of the pandemic, underlined, in a note, Joe Manimbo, Western Union analyst.
The British institution “is a credible central bank” in terms of inflation management, added, in a note, Kit Juckes, an analyst at Societe Generale.
Elsewhere in the foreign exchange market, the franc and the yen advanced once morest the main world currencies.
The two currencies are sought “in a general environment of risk aversion”, said Christopher Vecchio.
They also benefit, he explained, from the persistence of inflation in the United States.
In times of risk aversion, US government bonds are favored by investors, which lowers their rates (the two move in opposite directions).
The real rate of return on bonds, once inflation is deducted, therefore becomes less attractive, prompting some traders to sell and fall back to other currencies, primarily francs and yen.
