UK set for hike rates to 5%

UK interest rates are expected to rise to a five-year high of 5% after the Bank of England’s lunchtime meeting. The predicted raise from 4.75% would be seen as a bid to cool inflation.

Currency strategists said there was some scope for disappointment from the BoE’s post-meeting statement as investors are looking for as much as two more rate increases next year.

The pound slipped to $1.9055 from $1.9080 but was near this year’s peak of $1.9146 struck in August. Sterling also hovered near an eight-year high at 224.50 yen.

The BoE’s rate increases, heavy inflows into the United Kingdom from mergers and acquisitions, and central bank reserve purchases have made sterling the best performing major currency this year, with a nearly 11 percent gain against the dollar.