Sterling touched a fresh 15-month high on Wednesday after a Bank of England (BoE) banking system stress test showed Britain's largest lenders have enough capital to ride out a potential economic crisis, firming bets for more BoE rate hikes ahead.
Wads of British Pound Sterling banknotes are stacked in piles at the Money Service Austria company's headquarters in Vienna, Austria, November 16, 2017. REUTERS/Leonhard Foeger/File Photo
The test showed Britain's eight biggest banks had enough capital to weather theoretical shocks under a scenario which the BoE said was more severe than the global financial turmoil of 2008 when British taxpayers had to bail out several lenders."The UK economy and financial system have so far been "Headlines suggest large banks have passed stress tests while smaller lenders and shadow banks remain a concern, though UK households with high debt will remain below their peak of 2007. At first glance, there seems nothing here to urgently constrain the BoE's monetary tightening plans," said Chris Turner, head of markets at ING.The stress test result added to UK wage growth data on Tuesday which fed expectations the BoE has further to go in raising rates.
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