GBPEUR/GBPUSD

The Pound weakened against the Euro yesterday, but rallied versus the U.S Dollar, after Bank of England policy maker Matin Weale said that the MPC should raise interest rates to curb inflation. Weale joined Andrew Sentance in voting to increase borrowing costs from the current record low of 0.5%, as UK inflation surged to 3.7% in December, the tenth month in a row that consumer prices have been above the government's upper limit of 3%.

In a newspaper report yesterday, Weale was quoted as saying there is a "powerful case" for a "modest rise" in interest rates in the UK. Significantly, Weale maintains this view, even after the UK economy sank into negative growth in the preliminary estimate for the fourth quarter, and his comments will spur speculation that the BoE will consider raising rates before the end of the year.....

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