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British pound rises after Bank of England official backs interest rate hike
The British pound (Exchange: GBP=) jumped more than half a percent against the U.S. dollar on Wednesday after a top Bank of England official signaled he expects to vote for a rate hike later this year.
"Provided the data are still on track, I do think that beginning the process of withdrawing some of the incremental stimulus provided last August would be prudent moving into the second half of the year," Bank of England chief economist Andy Haldane said in a speech Wednesday.
Sterling traded at $1.269 against the greenback, but it's still down more than 13 percent against the U.S. currency over the past year.
Pound/dollar 12-month chart
Source: FactSet
Haldane's remarks come in stark contrast to a more dovish tone struck by BOE Governor Mark Carney recently. Carney said during a speech that talk of an imminent rise in U.K. interest rates was premature, highlighting a rift among the central bank's policymakers.
The BOE voted 5-3 to keep interest rates unchanged last week, a closer outcome than investors had expected. Haldane was one of the officials who voted in favor of holding rates steady.
"The Bank of England remains on hold for a few obvious reasons (Brexit), although they have also noted increasing concerns that inflationary pressures were taking hold in the British economy," Tom Stringfellow, president and CIO of Frost Investment Advisors said in a note Tuesday.
Earlier this week, the U.K. and the European Union kicked off Brexit talks. U.K. Brexit secretary David Davis said he hopes for a "strong and special partnership" with the EU once Britain leaves. However, chief EU negotiator Michel Barnier said the talks will first focus on the "uncertainties caused by Brexit."
—Reuters contributed to this report.
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