LONDON, May 17 — The British pound rose to its highest level since May 5 today as strong labour market data reinforced expectations that the Bank of England will need to continue raising interest rates to fight high inflation.
The BoE is closely watching the labour market, as it fears that higher-than-normal pay growth could see the current energy-driven surge in inflation become entrenched. “Although consumer purchasing power is set to be eroded further by an apocalyptic rise in food prices, that is not likely to deter the Bank of England from the necessity of having to be tougher with its monetary policy given that wage growth is fast becoming another inflationary pressure,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.At 0830 GMT, sterling was up 1.3 per cent against the US dollar at US$1.