The pound rallied against other major currencies today as markets priced in a higher probability of an imminent interest rate increase by the Bank of England. Recent economic indicators, particularly inflation figures, have exceeded expectations, leading analysts to believe that the central bank will act to curb rising prices.

Several factors are contributing to the speculation:

• Inflation remains stubbornly above the Bank of England’s target.
• Wage growth is accelerating, potentially fueling further inflationary pressures.
• The housing market continues to show resilience.

Traders are now awaiting the release of key economic data next week, including retail sales and unemployment figures, which could provide further insight into the strength of the UK economy and influence the Bank of England’s decision.

However, some economists caution against premature expectations of a rate hike, citing concerns about the potential impact on economic growth. They argue that a rate increase could dampen consumer spending and investment, potentially leading to a slowdown in the economy.

The Bank of England’s Monetary Policy Committee (MPC) is scheduled to meet next month to decide on interest rates. The committee’s decision will be closely watched by markets around the world.