At their last meeting the Bank of England voted by six votes to three to increase UK interest rates by 0.25%. The concern of the three was that we still needed to see what affect the previous increases had had on the UK economy before instigating further increases. They may well be right as UK retail shows some signs of slowing [although torrential rain probably doesn't help]. The general feel in the market is that a further increase of 0.25% is likely later this year but some commentators are now no longer as certain of this as they were.
The Cypriot £ [Cy£0.863/£1], which is pegged to the Euro, lost a bit of ground against sterling on the back of the Euro highs against the US$. This is even hurting industry in Germany so goodness knows what pain the French and Italians are having to endure. However, the European Central Bank is expected to increase interest rates in September to keep on top of inflation so I suspect limited further upside for sterling unless there are some surprises around the corner.
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