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Pound Rebounds

Sterling hit a six-week high above $1.30 today, close to its highest levels in nine months, on bets that British interest rates could be hiked in the coming months.

The pound has risen around 3.5 percent against the dollar since the start of April — its best quarterly performance in two years and its second straight quarter of gains after six successive losses.

Sterling has benefited over the quarter from a dollar weakened by the fading of the “Trumpflation trade”, with investors disappointed that U.S. President Donald Trump was not so far following through with policies that would boost growth and inflation.

It has also been boosted by rising expectations that monetary policy could be tightened. It was given a significant lift this week when Bank of England Governor Mark Carney said a rise in rates was likely to be needed as the economy came closer to running at full capacity, and that the Bank would debate this in the coming months.

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