Pill's Hawkish Call Bolsters Pound Sterling

Bank of England Chief Economist Huw Pill has called for a 'prompt' interest rate rise to counter the risk that the Iran energy shock leaves price pressures embedded in the UK economy.

Pill made this case at an Edinburgh Chamber of Commerce roundtable on Thursday evening, where he argued that an increase need not mark the start of a prolonged tightening cycle. He believes a hike in September would limit the need for further hikes in the future.

Markets now discount roughly two and a half further Bank of England hikes by mid-2027, and sterling's rate support is currently built on that pricing holding.

However, Governor Andrew Bailey's caution has consistently sat at odds with Pill's position. Bailey speaks at 09:50, and his views could influence the pound's trajectory.