UK POUND RISES AGAINST THE DOLLAR

UK POUND RISES AGAINST THE DOLLAR

The British pound rose Wednesday on foreign exchange markets following news of a pledge from John Major, U.K. chancellor of the exchequer, that interest rates could move higher.

Meanwhile, the U.S. dollar in New York moved broadly higher against other currencies, partly on month-end corporate buying and partly on speculative buys by a few big players.The pound was bid up to $1.7070 by late Wednesday compared with $1.6945 at Tuesday's close.

Mr. Major told a plenary meeting at the Organization for Economic Cooperation and Development in Paris, "If I judge it as necessary, a further rise in interest rates in the U.K. cannot be ruled out."

U.K. base rates are at 15 percent. The market had hoped Mr. Major would expand on the government's plans for taking sterling into the exchange rate mechanism of the European Monetary System, but he did not comment on the question.

But after a brief flurry of activity in the pound sterling on Mr. Major's comments, activity in the market died away.

Dealers said the dollar rose against the deutsche mark as the latter weakened after the market inferred from comments by West Germany's economy minister that West Germany would not have to raise interest rates imminently.

The dollar also turned higher as corporations bought dollars in order to repatriate foreign profits, which is usually the case at the end of a month. But it's also common at the end of the month for traders to avoid trading, rather than risk any profits accrued during the month, dealers said.

At Amsterdam Rotterdam Bank, John McCarthy noted that the deutsche mark was under modest late selling pressure on talk that the West German Bundesbank will not hold a news conference at its council meeting today, giving rise to speculation it will not announce a tightening.

"But the Bundesbank is again saying it's committed to a strong mark, yet I suspect it won't intervene in the market before we get to 1.70, which leaves us 1 3/4 pfennigs to trade with," Mr. McCarthy said.

The market's primary focus is on Friday's key report on May employment. Some 90,000 to 160,000 new workers are expected.