GBP/USD Fundamental Outlook at 1500 GMT (EST + 0500)

The British pound appreciated sharply vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.6190 level and was supported around the $1.6045 level.  Former Bank of England Monetary Policy Committee member Buiter reported the central bank may start to raise interest rates by the middle of the year, possibly taking the Bank Rate to 0.75% to 1.00%.  Buiter suggested the BoE's rate hike could come before the European Central Bank contemplates one.  The big news in the U.K. remains the general election that is scheduled to be called before June.  Prime Minister Brown is attempting to rally the Labour Party following widespread discontent from within his own ranks.  Tory opposition leader Cameron is pledging earlier and deeper deficit reductions.  CBI today reported the U.K. services sector evidenced its second consecutive increase in activity in the fourth quarter but projects business activity should slow in the coming months.  Cable bids are cited around the US$ 1.5730 level. The euro gained ground vis-à-vis the British pound as the single currency tested offers around the ?0.9025 level and was supported around the ?0.8970 level.