LONDON (Bloomberg) — The pound surged to its highest in 15 years against the dollar as reports showing faster inflation stoked speculation the Bank of England will raise interest rates twice more this year.The currency rose for a fifth straight day after reports showed house prices rose and factory-gate prices increased the most in 11 months. The prospect of higher rates prompted investors to buy UK assets using funds borrowed in lower-yielding currencies such as the yen, which sank to the weakest in more than two months against the pound.

“The pound is stronger as interest-rate expectations have risen on the back of the housing indicator,” said Adam Cole, a senior currency strategist at RBC Capital Markets Ltd. in London. “I think we’ll trade through $2.”

The pound touched $1.9940, its strongest since September 9, 1992, and traded at $1.9905 at 4.22 p.m. in London, from $1.9863 on April 13. It also rose to 238.27 yen, the highest since February 12, from 236.89 late on April 13.

The prospect of higher interest rates hurt UK government bonds. The yield on the benchmark 10-year gilt was at 5.07 percent, near the highest since August 2004. The UK currency is at its strongest since billionaire investor George Soros and other speculators drove it out of Europe’s system of linked exchange rates, known as the Exchange Rate Mechanism.

The then-UK Prime Minister John Major pulled the pound out of the ERM on September 16, 1992, after authorities failed to keep it within its limit of 6 percent from a peg of 2.95 marks. Current Chancellor of the Exchequer Gordon Brown described that day as “Black Wednesday.”

The pound surged yesterday as a report showed house-price inflation quickened to the fastest pace in almost two years in February. Home values rose 12.1 percent in the year, the most since March 2005, according to Rightmove Plc, the country’s biggest property web-site. Factory-gate prices gained 0.6 percent in March, up from 0.4 percent a month before, according to a government report yesterday.

“Inflation is a problem,” said Paul Chertkow, head of global currency research at Bank of Tokyo Mitsubishi UFJ Ltd. in London. “We could have people talking about not just one more quarter-point increase after one in May, but maybe two more.”

Chertkow said the pound may break $2 this week, and rise as high as $2.05.