FxWirePro: Pound skyrockets as dove Vlieghe turns hawk

British pound sterling is skyrocketing today after yesterday’s superb Bull Run BoE’s hike hit as one of the most dovish members of the central bank’s Monetary Policy Committee (MPC) turns out a hawk as inflation rose. According to the latest report, headline inflation edged up 2.9 percent in August, while core inflation edged up to 2.7 percent; both above Bank of England’s target of 2 percent. This prompted the central bank to indicate the possibility of future rate hikes at yesterday’s meeting.

After Bank of England (BoE) said yesterday in its monetary policy, “A majority of MPC members judge that, if the economy continues to follow a path consistent with the prospect of a continued erosion of slack and a gradual rise in underlying inflationary pressure then, with the further lessening in the trade-off that this would imply, some withdrawal of monetary stimulus is likely to be appropriate over the coming months in order to return inflation sustainably to target”, the central bank’s newest member Gertjen Vlieghe, a known dove said, “the evolution of the data is increasingly suggesting that we are approaching the moment when Bank Rate may need to rise…..may be as early as the coming months.”

The pound has sharply moved higher over these comments. The pound is currently trading at 1.359, up 390 pips in the past two days.