Mark Carney participated on a BBC radio show in which he covered a number of topics including interest rates rises, the current threat posed to the UK economy by Brexit and the economies growth.
Pound Sterling rates had enjoyed a number of encouraging weeks partly spurred on by this month’s Bank of England meeting and subsequent minutes which stated that the UK economy, although challenged by Brexit had demonstrated encouraging signs with the Bank of England even hinting at the potential of UK wage growth. Markets viewed this buoyancy and subsequent talk of interest rate rise green light and Pound Sterling rates have progressed nicely, enjoying a sustained appreciation over the last two weeks.
Regrettably Carney’s comments yesterday will have done little to add to the positivity. During the Radio emission, he stated in no uncertain terms that the next 2-3 year of Brexit negotiation and transition would damage people’s finances and hurt the UK economy.
Carney did, however, stand by the BOE’s stance on gradual interest rate hikes stating that:
We can see that in the coming months if the economy continues on this track, it may be appropriate to raise interest rates
He, unfortunately, however, gave no indication of when the gradual rises may begin.
In recent weeks, Financial policymakers had been criticised by Jeremy Corbyn leader of the labour party. He defended the bank’s policies pointing reference to the encouraging economic figures. Notably, the UK unemployment levels which are currently the lowest in nearly 50 years.
Pound Sterling rates
Pound Sterling rates have enjoyed solid growth against the Euro in recent weeks only being shaken by Mark Carney comments surrounding the potential effects Brexit may have on the UK economy. Fortunately, Pound Sterling rates have recovered following a bold claim from David Davis. The Brexit secretary stating that the negotiation team were making “decisive steps forward”.
This week GBP/EUR hit a low of 1.3118 from a previous weekly high of 1.1431. The pair closed trading at 1.1341.
The week ahead for Sterling
Manufacturing, Construction and services PMI can make or break Pound Sterling Rates this week. As the biggest contributor to the UK GDP services will be watched closely. Services PMI is anticipated to equal last month’s level of 53.2.