LONDON: Sterling jumped almost half a cent against the dollar to its strongest levels this week on Wednesday after Bank of England Deputy Governor Ben Broadbent said markets should focus more on broader indicators of economic growth than the bank's recent subdued inflation forecasts.
In a speech at a Reuters newsmaker event, Broadbent warned investors to not to "focus obsessively" on the inflation forecasts, whose publishing earlier this month drove back expectations of when the bank might first raise interest rates.
Sterling rose as high as $1.5250 in the minutes after details of Broadbent's speech were released by the bank from around $1.5205 beforehand.
The euro also dipped to 70.12 pence.
"His comments on the inflation report and on spare capacity in the economy in general were pretty hawkish so there has been a move in sterling," said Michael Sneyd, a strategist with BNP Paribas in London.
"We think the market perceived the inflation report to be far more dovish than it really was. The Bank will aim to tighten rates very slowly, but that may well involve getting in a couple of reasonably early hikes."
Gilt prices also fell by around 10 ticks to a session low of 117.37 after the speech.
The chances of a rate rise by September of next year also rose, with short sterling contracts adding an extra 2-3 basis points in pricing for next June and September, which already show some chance of a hike.
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