Carney strikes dovish tone
Sterling fell to a near two-week low against the US dollar after Bank of England Governor Mark Carney said there could be a ‘relatively prompt response’ from the bank if the current spell of economic weakness persisted.
Sterling fell as much as 0.6% to $1.3014, its lowest level since 27th December and it also fell against the euro, down by 0.6%. Money markets currently price a roughly 60% chance of a 25 basis point interest rate cut by December 2020. Carney went on to say that the central bank was debating the merits of near-term stimulus, adding that a rebound from Brexit uncertainty wasn’t guaranteed and that UK economic growth was below potential. This led money markets to price in a higher chance of a Bank of England rate cut by the end of the year.
Furthermore, the pound was also effected by comments made by EU Chief Michel Barnier, who stated that talks over the future relationship between the European Union and the UK are unlikely to be completed by the end of the year. Barnier was quoted saying that ‘the timetable ahead of us is extremely challenging’, and ‘we cannot expect to agree on every single aspect of this new partnership in under a year’. Earlier this week, Boris Johnson told European Commission President Ursula Von Der Leyen that Britain will not extend the country’s post Brexit transition period beyond the end of the year, but Barnier believes this time period will not be sufficient enough to secure a trade deal.
USD – 13:30pm: Nonfarm Payrolls; expected to fall to 164k from 266k.
GBP – 13:30pm: Average Hourly Earnings (YoY) (Dec); expected to remain at 3.1%.
Why choose RationalFX?
Based in the heart of London’s financial district Canary Wharf, RationalFX has traded over $10billion in currencies across the globe. Take advantage of our competitive exchange rates, market expertise, suite of FX products and online payment platform when you make bank to bank transfers in over 50 currencies worldwide.
Whatever your reason for making overseas payments, we’re confident our currency specialists can save you time and money while providing peace of mind. Call our team now on: +44 20 7220 8181