LONDON (AP) — The pound has pushed above the $1.40 level as traders price in a growing likelihood of another interest rate increase in May from the Bank of England.
The anticipated quarter-point rate hike, which would take the benchmark rate to 0.75 percent, came after the bank turned more confident about the British economy’s near-term growth prospects. It said interest rate rises were likely to come sooner than it anticipated just three months ago.
ING economist James Smith said the bank “caught markets off-guard with its surprisingly bullish outlook for the economy and interest rates.”
However, others thing the bank may be too optimistic.
Abi Oladimeji, chief investment offficer at Thomas Miller Investment, says global growth is likely to moderate and inflation will ease. The Bank of England, he says, is “likely to change its tune.”
The pound was 1.1 percent higher at $1.4033.