London - The pound rose and bonds fell after Bank of England (BoE) Deputy Governor Ben Broadbent said interest rates could rise more than the markets expect.
Two-year gilts pared this week’s rally on his remarks, though he told BBC Radio that any increase would be gentle.
Broadbent’s comments came after the pound fell from an 11-month high on Thursday as the market interpreted the central bank’s decision to leave interest rates unchanged as dovish.
“I think it’s some bounce-back after yesterday’s heavy sell-off,” said Lee Hardman, a foreign-exchange strategist at MUFG in London. “The BoE was still kind of stressing the market was underpricing rate hikes going forward, but the market doesn’t believe them right now.”
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