In the wake of Mark Carney’s Mansion House speech which claimed we could see an interest rate hike before the year is out, sterling has surged to new highs. The Bank of England’s governor Carney, sent shockwaves through the financial world by suggesting these hikes could come as soon as October, but those heading abroad this summer needn’t wait until the autumn to reap benefits.

In the days that have followed, the pound has continued to climb against many other currencies. Those heading to the Eurozone this summer will be happy to note the pound’s 18-month high against the euro, but perhaps even more significant is the pound-dollar rate. This morning the pound tipped above the 1.70 mark bringing it to its highest level against the dollar in more than 5 years. The pound has since dipped back down to just below that level but can it regain that high and hold it? Caxton FX’s currency analyst Kamil Amin has been watching the pound-dollar rate eagerly;

“There is some very firm resistance at the 1.70 level and I don’t expect the pairing to move beyond that level in the first half of the week. We do however have some critical monetary policy meetings at the back end of the week in the UK and US and this is likely to cause some movement.  We expect the BoE to revise their current time frame for a hike in the base rate forward and this is why we have seen sterling strengthen since Friday. Unless the revision is dramatic and a lot earlier than we are expecting, we shouldn’t see sterling strengthen too much more with most of the meeting outcome already priced in. There will therefore be more focus on the Federal Reserve and their view on how economic recovery has progressed in Q2. If they continue to downplay any progress as they did through Q1 or diffuse any speculation regarding increasing interest rates anytime soon, we could see cable break through the 1.70 resistance and edge past the 5 year high.”