The release of the upbeat data on the UK economy by the BOE saw the pound sterling climb 0.5 percent at $1.3201 against the dollar as well as the euro following the announcement on Wednesday. The economy grew 0.4 percent during the last quarter, exceeding forecasts by economists.
Probability of a Rate Hike
Market indicate an 84 percent probability that the Bank of England will raise interest rates from the current low of 0.25 percent at their next monetary policy meeting on 2 November, which will be the first rise since 5 July 2007.
The service sector expanded 0.4 percent and was the biggest contributor to growth in the third quarter, with strong performance in computer programming, retailers and motor traders. Manufacturing also gained 1 percent while there was a contraction of 0.7 percent in construction the most in five years.
Green Light for Rate Hike
According to Chief economist at Deloitte, Ian Stewart who said that today’s data on the growth figures on the UK economy should be a green light for a raise in interest rates next Thursday by the bank.
Mark Carney, the governor has already indicated in an interview last month with BBC, that in the near term there could be a small gradual rise in rates, as inflation rises at 3 percent.
Especially now with the latest robust economic growth data the era of low interest rates is coming to an end.
Economist at Scotiabank in London, Alan Clarke reportedly said that the last potential hurdle that had been standing in the way has been removed paving the way for a rate hike next week.
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