2014.08.1723:35:57UTC+00Sterling advances as BOE signals interest rates may rise

The British pound sterling ascended Monday following the Bank of England said the UK interest rates might need to rise even before wage growth recovers, trailing earlier statements that pressed markets to push out the risk of a rate hike.

Pound climbed as high as $1.6739, from around $1.6689 late Friday. The currency also firmed versus the euro, which slipped below 80.00 pence, previously 80.23 pence.

Last week, sterling nailed a four-month trough of $1.6657 after the BOE cut down its forecast for wage growth and emphasized any interest rate hike would depend hugely on an improved outlook for pay.

But BOE Governor Mark Carney mentioned, in an interview with the Sunday Times, he won’t wait for real wages to become upbeat before increasing rates. He has wrong-footed markets before and the sterling bulls seemed to be getting his latest comments with a pinch of salt.

The other major currencies were holding on to their time before a gathering of key central bankers at the Federal Reserve’s Jackson Hole symposium on August 21, which would concentrate on re-evaluating labor market dynamics.

"Historically, trading leading into Jackson Hole sees increased volatility. Talk so far is that chairperson Yellen is concentrating on employment and the composition of wage growth and full-time versus part time percentages; this issue is likely to be echoed by central bankers around the world as global employment remains soft at best," said Evan Lucas, IG Strategist.