Sterling is at its strongest level since 2008!

THE pound rose to its highest level in five years yesterday after fresh evidence of economic recovery re-ignited the debate about when interest rates might rise.

Measured against a basket of currencies, sterling jumped to its strongest since 2008.

The pound has risen by 11 per cent over the past year and the latest surge saw it touch a 16-month high against the euro and trade just below the near five-year high it reached against the dollar earlier in the month.

It followed strong retail sales figures which showed a 6.9 per cent rise in April against a year earlier.

Meanwhile minutes of this month’s Bank of England MPC coverage" class="tcb-autolink">Monetary Policy Committee showed some members thought the discussion about a possible interest rate increase from 0.5 per cent was becoming “more balanced”.

Most economists think rates will not rise this year but are split about how soon they might go up in 2015.

We forecast interest rates will rise to 0.75 per cent next spring and will then edge up to reach 1.0 per cent by the end of 2015 and 2 per cent by the end of 2016. For any more information on the markets or a live quote on your desired currency please call us on 01322 319550 or email prem.raja@currencies4you.com