Sterling Spikes Following Hawkish Comments From BoE Deputy Governor

Ramsden told The Sunday Times interest rates would need to be hiked at a faster pace as a result of stronger-than-anticipated wage growth.

The change in tone from the typically dovish Monetary Policy Committee (MPC) member will add to the growing belief that rates will be raised in May.

Ramsden was one of only two MPC members to vote against the interest rate increase to 0.5% in November.

On the news, sterling was up against all major currencies most notably climbing 0.62% to $1.406 against the US dollar and 0.26% to €1.139 against the euro.

"There does seem to me more impetus on wages," Ramsden told The Sunday Times. "We all will keep a close eye on what happens through the early part of this year to see if that forecast [in a Bank survey] of wage growth picking up to 3% is realised.

"But certainly relative to where I was, I see the case for rates rising somewhat sooner rather than somewhat later."

Could the UK see two rate hikes this year?

At its latest MPC meeting earlier this month, the BoE adopted a more hawkish stance by suggesting a rate rise would be needed "somewhat earlier" and to a "somewhat greater extent" than previously anticipated.

This caused markets to price in a 67% chance of a rate rise of 25 basis points to 0.75% in May, up 17% from prior to the MPC's meeting.

The reason for the change in tone from the MPC is continued high inflation, which remains well above the BoE's 2% target at 3%.

The week after February's MPC meeting, inflation once again beat analysts' expectations by holding at 3%, according to the Office for National Statistics (ONS), putting further pressure on the BoE for a March hike.