Sterling hits December highs after BOE raises interest rates

[LONDON] Sterling rose on Thursday (Dec 16) after the Bank of England (BOE) hiked its key interest rate by 15 basis points and before the outcome of a meeting of the European Central Bank (ECB), which analysts expect will be more dovish.

Investors recently took the view that the rapid rise in infections from the Omicron variant of coronavirus would have forced the BOE to adopt a cautious stance despite recent robust economic data and high inflation.

The BOE raised its main interest rate to 0.25 per cent on Thursday as inflation pressures mounted in Britain, becoming the first major central bank in the world to raise borrowing costs since the coronavirus pandemic hit last year.

Sterling was up around 0.7 per cent against the US dollar and the euro, hitting its highest levels since the end of November at 84.54 pence and US$1.3368.

REUTERS