February 8, 2018 / 12:14 PM / 7 months ago

Sterling jumps after cbank sees rates rising sooner; stocks slip

LONDON, Feb 8 (Reuters) - Sterling jumped and stocks hit session lows on Thursday after the Bank of England said interest rates probably needed to rise sooner and by a bit more than it thought three months ago.

Against the dollar, the pound rose as much as 0.9 percent to hit a day’s high of $1.4015 after trading flat before the BoE announcement, in which the bank kept rates unchanged.

Against the euro, sterling rallied more than one percent to hit a one-week high of 87.41 pence.

Britain’s internationally-exposed FTSE 100 hit its session low, down 1.1 percent, after the BoE decision.

The Bank of England said interest rates probably needed to rise sooner and by a bit more than it thought three months ago, after it raised its economic growth forecasts for Britain due to the strong global recovery.

British two-year government bond yields rose to the highest since December 2015 after the decision, rising by around 6 basis points after the decision to 0.706 percent.

Short sterling interest rate futures fell sharply after the decision, dropping around 5 to 7 ticks across 2018 and 2019 contracts and indicating a steeper path of interest rate hikes priced by the market. (Reporting Tommy Wilkes, Kit Rees and Andy Bruce; Editing by Saikat Chatterjee)

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