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Pound surges after hint of interest rate hike

LONDON (AP) -- The pound jumped against the dollar to its highest level since 2009 after Bank of England Governor Mark Carney predicted an interest rate hike might come sooner than expected.

The pound rose to $1.6960 on Friday from $1.6830 the day before after Carney said an interest rate rise above its record low of 0.5 percent, “could happen sooner than markets currently expect.”

Carney's remarks late Thursday surprised economists, as the bank has suggested any rate rise would be gradual. But with the economy strengthening and the unemployment rate dropping to 6.6 percent in the three months ending in April, the pressure to raise rates increased.

The governor also warned of the threat of an overheating housing market and promised “graduated and proportionate actions” to cool the danger to the economy.

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