The exchange rate has climbed to €1.139, the highest level seen since July.

Sterling was delivered a significant boost at the end of last week after the Bank of England voted on interest rates.

Though the vote remained unchanged at 7-2, key policymakers made comments pointing to a hike before 2017 is through.

Gertjan Vlieghe is widely regarded as the most cautious Monetary Police Committee (MPC) policymaker.

Pound euro exchange rate

Pound euro exchange rate: Sterling has been boosted by hints of an interest rate hike

Markets had their foot firmly on the GBP/EUR accelerator

Rewan Tremethick

But in a speech on Friday Mr Vlieghe said: “The evolution of the data is increasingly suggesting that we are approaching the moment when [the] bank rate may need to rise.

“If these data trends of reducing slack, rising pay pressure, strengthening household spending and robust global growth continue, the appropriate time for a rise in bank rate might be as early as in the coming months.”

Mr Vlieghe’s strong hints of a looming rate rise sent sterling soaring against the euro and the US dollar.

Rewan Tremethick, currency analyst at TorFX said: “Markets had their foot firmly on the GBP/EUR accelerator again on Friday.

Pound euro exchange rateBLOOMBERG

Pound euro exchange rate: Sterling is buying €1.139

“After rising at a blistering pace on Thursday, the pound was racking up the gains once more as bets of a near-term interest rate hike from the Bank of England (BoE) continued to rise.

“Monetary Policy Committee (MPC) member Gertjan Vlieghe stated that interest rates might need to rise soon – and that more than one hike would probably be necessary.

“Coming from the man widely regarded as the most cautious policymaker on the committee, these remarks gave markets significant reason to get excited.”

The exchange rate has held onto its gains at the start of a new week, but there are several events on the calendar that threaten sterling’s position.

Pound euro exchange rate

Pound euro exchange rate: Bank of England Governor Mark Carney will give a speech at 4pm

Bank of England Governor Mark Carney will give a fresh update in a speech he’s due to make in Washington DC at 4pm (BST) today.

Mr Carney will address the Camdessus Central Banking Lecture for 2017.

Also ahead this week is the release of UK retail sales on Wednesday.

Figures are expected to rise 1.1 per cent year-on-year for August, from 1.3 per cent previously.

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