Sterling rose on Friday close to a 23-month high against the euro as investors expected the Bank of England (BoE) to raise rates next week and follow a path of rapid monetary tightening in 2022.
Analysts said the BoE's hawkish stance would boost the pound despite the tightening plans from the US Federal Reserve providing some protection for the dollar.
"Key rates that rise by more than 25bp (at next week's policy meeting) would help sterling if BoE governor Andrew Bailey were able to convince the market that the BoE has a plan," Commerzbank analysts said, describing last year's BoE announcements as "fickle."
The BoE’s decisions on rates wrong-footed markets in November and December.
Sterling was up 0.2 per cent versus the euro at 83.12 pence, within striking distance of a 23-month high of 83.065 pence touched on January 20th. – Reuters
