By Joice Alves
LONDON (Reuters) – Sterling rose on Wednesday after data showing rising house prices in Britain supported bets that the Bank of England (BoE) was not likely to cut interest rates any time soon.
British house prices rose 2.5% in the year to January, the strongest annual growth rate for a year, according to data from mortgage lender Halifax that added to tentative signs of recovering momentum.
In a sign that the BoE is in no rush to cut interest rates, Deputy Governor Sarah Breeden said she was now thinking about how long interest rates would need to stay at their current level, instead of whether they would need to rise further.
“Further signs of resilience in the UK housing market from the Halifax survey underpin the view that the BoE won’t be in an hurry to cut rates,” said Jane Foley, head of FX strategy at Rabobank.
“The remarks from the BoE’s Breeden this morning also signal that she is in no particular rush to ease policy,” she added.
Sterling rose 0.25% against the dollar to $1.2629, after sliding on Monday to an almost two-month low.
Against the euro, it was up 0.16% at 85.24 pence after briefly touching a one-week high.
Money markets see a 61% chance of a BoE rate cut in June. The central bank kept interest rates at a nearly 16-year high early this month but opened up the possibility of cutting them as inflation falls and one of its policymakers cast a first vote for a reduction in borrowing costs since 2020.
A think tank said British living standards will start to rise again this year but it will be 2027 before poorer households recover their pre-pandemic spending power.
(Reporting by Joice Alves; editing by Christina Fincher)