- RSS Channel Showcase 4050094
- RSS Channel Showcase 3868555
- RSS Channel Showcase 6060993
- RSS Channel Showcase 3345920
- 06/22/17--00:47: The pound is flat after a rollercoaster day on Wednesday
Sterling dropped to its lowest point since April on Tuesday after Governor of the Bank of England Mark Carney said that interests rates should not be raised any time soon.
Carney said borrowing costs should not go up before there is a clear picture of how the Brexit talks will play out during a speech made at London's Mansion House.
Although sterling fell this morning after the speech, it fell even further on Tuesday afternoon after the DUP reported that talks with Prime Minister Theresa May had not gone as they had expected.
The pound dropped 1.04% to $1.2606 as of 16:15 p.m. BST (11:15 EST).
"Given the mixed signals on consumer spending and business investment, and given the still subdued domestic inflationary pressures, in particular anaemic wage growth, now is not yet the time to begin that adjustment," said Carney.
"In the coming months, I would like to see the extent to which weaker consumption growth is offset by other components of demand, whether wages begin to firm, and more generally, how the economy reacts to the prospect of tighter financial conditions and the reality of Brexit negotiations," he said.
Carney's comments come after three members of the Bank's Monetary Policy Committee last week voted to increase rates, shocking investors who had expected just one member, the outgoing Kristin Forbes, to back tightening policy.
The Chancellor, Philip Hammond, spoke alongside Carney, noting that Brexit negotiations should include a transitionary period in which the UK will be outside the customs union but will still abide by customs union rules.
The speeches weree originally scheduled for last Thursday, but the City of London corporation cancelled the event following the Grenfell Tower disaster.
"Investors today will focus on what BoE’s Mark Carney has to say after three MPC policymakers voted to raise interest rates last week, " said Hussein Sayed, chief strategist at FXTM. "Rising prices and falling wages is one of the biggest challenges a central bank can face, and investors need more clarity on what tools are available to tackle these problems," he said.
"With Brexit negotiations now officially underway, it will be interesting to see whether sterling remains as vulnerable to the constant flow of updates and commentary, especially given the friendlier tone that both sides adopted on day one," said Craig Erlamn, senior market analyst at Oanda.
LONDON — The pound has jumped early on Wednesday afternoon after one of the Bank of England's key policymakers signalled that he is close to backing a hike in interest rates.
Speaking in Bradford, Andy Haldane, the BoE's chief economist, and a member of its Monetary Policy Committee said that a "partial withdrawal of the additional policy insurance the MPC put in place last year would be prudent relatively soon," effectively saying that he is almost ready to increase rates.
That buoyed investors in the pound, with the currency jumping from virtually flat to a gain of close to 0.5% on the day. Here's how that looks, as of around 12.20 p.m. BST (7.20 a.m. ET):
Prior to Haldane's speech, sterling was broadly flat after the Queen delivered Prime Minister Theresa May's legislative plans for the next parliamentary session in her speech at the State Opening of Parliament, leaving out several key promises from the Conservative Party's manifesto.
May was widely expected to make concessions from the election manifesto in order to get the legislative programme through the house and allow her to create a new government after she failed to secure a majority.
Earlier on Wednesday, the pound dropped to a new post-election low, dragged lower by Bank of England Governor Mark Carney's assertion on Tuesday that interest rates should not increase anytime soon.
Sterling's fall on Wednesday morning followed on from a big drop on Tuesday. The currency tumbled more than 1% during trade on Tuesday after Carney told financiers at London's Mansion House that he does not believe interest rates should be increased, saying: "From my perspective, given the mixed signals on consumer spending and business investment, and given the still subdued domestic inflationary pressures, in particular anaemic wage growth, now is not yet the time to begin that adjustment."
LONDON — The pound is little moved on Thursday as investors take a breather from a manic day for the currency on Wednesday when sterling slumped and jumped numerous times.
Sterling rode a rollercoaster on Wednesday, slumping during early morning trade to hit a new post-election low, before recovering ahead of the Queen's Speech and then jumping after Bank of England Chief Economist Andy Haldane said that he is almost ready to back an interest rate hike, contradicting comments made by his boss, Governor Mark Carney, the previous day.
Consequently, the pound is treading water, down less than 0.1% as of 8.35 a.m. BST (3.35 a.m. ET) to trade at $1.2660, as the chart below illustrates:
The pound could be shaken from its slumber later on Thursday with rumours circulating that Prime Minister Theresa May could be set to provide some clarity on the future status of EU citizens living in the UK as Brexit talks enter their fourth day.
Earlier reports had suggested that Britain is planning to make a "very generous" offer on post-Brexit rights for the three million EU citizens who live in the UK. Any such move would likely be seen by the markets as something of a softening of the government's Brexit stance, and therefore a positive for the currency.