The expected interest rate differential will continue to widen, and the pound sterling is expected to rise to the key level of 1.30 against the US dollar.

　　The pound climbed to 1.30 against the dollar for the first time in more than a year as traders predicted that the current round of policy tightening would eventually see the UK's policy rates rise above those of other developed countries in the Group of 10.

　　1.30 is a key level below which the pound has largely traded since Britain voted to leave the European Union (Brexit) in June 2016.

　　This week's figures add to evidence that the Bank of England's most aggressive interest rate hike in decades has failed to tame inflation. Money market pricing suggests traders expect the boe to raise interest rates by another 145 basis points in March, taking the UK base rate to 6.5 per cent. For comparison: Peak interest rate forecasts for the euro area (EARN) and the United States (USA) are around 4.0% and 5.5%, respectively.

　　Most expect traders to keep buying sterling until higher interest rates push the UK into recession.

　　Strategists at MUFG said: "Sterling should continue to benefit from higher UK interest rates in the near term until there is evidence of a further slowdown in the UK economy as a result of higher rates." My mothers expect the pound to fall further to a low of 1.30 against the dollar in the near term."