LONDON: The British pound gave up brief gains on Tuesday, while gilt yields rose, after Bank of England Governor Mark Carney said Britain's first interest rate hike since the financial crisis was getting closer.
"With many of the conditions for the economy to normalise now met, the point at which interest rates also begin to normalise is getting closer," Carney said in a prepared speech to representatives of trade unions in Liverpool.
Sterling hit a day's high of $1.6157, almost a cent higher than a 10-month low hit earlier in the day on worries over the prospect of a Scottish vote for independence in a referendum next week. But it quickly pared those gains as investors sold into the rally.
It was last trading up 0.1 percent at $1.6128, roughly where it was before the speech was published.
The euro fell 0.2 percent against the pound to 79.925 pence .
The British 10-year government bond yield rose around a basis point after the speech to peak at 2.529 percent - its highest level since Aug. 25.
Britain's FTSE 100 showed little reaction to the speech. It was down 0.1 percent at 6,828.89 points by 1046 GMT, but housebuilders Persimmon and Barratt Developments , sensitive to any pronouncements on interest rates, pared back their gains slightly.
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