The Bank of England shouldn’t “hold back too long,” McCafferty said in a speech in London today. “It will be critically important that rises in bank rate are delivered, as far as we are able, at only a modest, gradual pace.”

BOE Chief Economist Andrew Haldane said the choice of when to raise interest rates is “a difficult one” and there are “some signs of the economy’s pulse quickening,” in a speech in Scarborough, England, yesterday.

Forward contracts based on the sterling overnight interbank average, or Sonia, show investors are betting the benchmark rate will increase 25 basis points by February, versus May before Carney’s speech last week. BOE officials last increased borrowing costs in July 2007.

“It seems that while the first BOE hike will be a 2015 story, we could see the first votes for a hike well before then,” strategists at Morgan Stanley led by Hans Redeker in London, wrote in an e-mailed note today. “We would look for the break above the key $1.70 resistance level to be sustained, with a move towards the $1.71 target to come over the next few weeks.”

Eoin Treacy's view

The Bank of England will probably be among the first Group of Seven countries to raise interest rates but it will do so in a measured fashion not least because such a high percentage of the UK’s housing market are on adjustable rates mortgages.

?The Pound continues to hold a progression of higher reaction lows against the Dollar and a sustained move below the 200-day MA would be required to question medium-term upside potential. 

The FTSE-100’s performance has been hampered somewhat by Sterling’s strength but looks increasingly likely to be able to sustain an upward break nonetheless. 

In US Dollar terms, the Index has been trending consistently higher for more than a year.