New BoE Governor speaks, sterling plummets | Smart Daily Currency Note
GBP/USD – 1.5043
Yesterday’s expression of the day was forward guidance – indication from an interventionist central bank as to what they are going to do with interest rates into the future. In his first act at Governor of the Bank of England, Mark Carney issued a surprise statement yesterday which expressed the Bank’s concern over rising gilt yields, and said that any rise in interest rates which might erstwhile have been implied was not warranted. Markets read this as the MPC giving forward guidance that interest rates would remain at record lows for the foreseeable future, and sterling plummeted across the board, breaking below 1.16 and 1.51 against the euro and US dollar respectively. While we saw a little recovery against a similarly weak euro, sterling stayed at 5-week lows against the US dollar. Away from our new Governor, PMI figures released earlier in the week made it clear that the recovery is well underway showing growth across the board including particular strong figures from the services sector which saw sterling strengthen mid-week. Today is much quieter on the news front, and sterling will trade in the wake of yesterday’s announcement. With traders heading back to their desks in the US, we could well see more excitement, call Smart today to find out how things are looking.
An up and down week for the US dollar; as traders continue to speculate if conditions are right to justify a reduction in asset purchasing facilities. The US dollar even weakened in spite of solid labour data which showed that the private sector put an extra 188’000 workers in employment, whilst the number of new people claiming for unemployment related benefits fell. The US dollar held its own on independence day, gaining against its major peers whilst sterling and the euro fell through the floor. Today, traders will be back at their desks, as a result, the markets will be far more liquid. Moreover, today see’s the release of the highly influential Non-Farm payroll data which will be closely watched given the labour data released earlier in the week and the Federal Banks comments that suggest that quantitative easing will only be tapered when the labour market has recovered to a greater extent. Get in touch now for live rates and news for the US dollar.