Sterling strengthens on BofE inflation report

Story link: Sterling strengthens on BofE inflation report

Sterling was stronger in midday trade in London on Wednesday after a new report on inflation from the Bank of England made increased analyst sentiment that the Bank will issue another interest rate hike in September.

The new report says that at the current interest rate of 5.75 percent inflation will be above the 2 percent target level in two years and that even at a 6 percent rate inflation would still be a bit above that level.

The UK currency had added 0.1 percent to £0.6790 against the euro, while it was up 0.2 percent to $2.0275 versus the US dollar and had added 0.7 percent to ¥241.74 in relation to the yen.

The yen weakened against other currencies as well on a report of significantly lower machinery orders in June, dropping 0.5 percent to ¥164.10 versus the euro, while it fell 0.7 percent each against the Australian and New Zealand dollars, to ¥102.25 and ¥90.89 respectively.

The Australian dollar was helped when the Reserve Bank of Australia raised interest rates to 6.5 percent, sending it 0.4 percent higher in relation to the greenback, to $0.8580.

The US currency strengthened versus the yen, gaining 0.4 percent to ¥119.16, but it held steady at $1.3750 in relation to the euro and at SFr1.1970 against the Swiss franc.