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Sterling up for fourth day running on hint of rate rise in 2010

The pound rose for a fourth day against the dollar, its longest run of gains since November, after Bank of England policymaker Andrew Sentance was cited as saying interest rates may have to increase this year.

The British currency also climbed versus the euro and the yen after the Guardian newspaper reported Mr Sentance as saying the bank had done enough to stimulate the economy. The yen fell against all 16 of its most-traded peers tracked by Bloomberg before fourth-quarter earnings reports this week from companies such as Intel Corp and JPMorgan Chase & Co, which some analysts say will bolster stocks.

"The comments from Sentance gave a sniff of a turn in the UK rate cycle, and that lifted the pound," said Adam Cole, the London-based global head of currency strategy at Royal Bank of Canada. "It's a bit premature in our view, but the comments moved the markets."

The pound climbed to $1.6234 in London, from $1.6164 yesterday in New York, for its longest sequence of gains since the five days through November 9. It strengthened to 89.33 pence per euro, from 89.63 pence, and appreciated to 148.43 yen, from 147.06. The dollar rose 0.5 percent to 91.45 yen and fell 0.1 percent to $1.4504 per euro $1.4486. The yen fell 0.6 percent to 132.63.

The yen surged the most in a month against the dollar yesterday as stock markets declined and the People's Bank of China raised reserve requirements for the nation's lenders, reducing cash available to fuel the rally in risky assets.

Policymakers have to consider raising rates as "there are global influences such as oil and commodity prices and the impact of the exchange rate, which can lead to speed limits for the rate of growth", according to Mr Sentance.

Irish Independent