Currency Note Sterling

Carney’s forward guidance provides unexpected boost for sterling

By Smart Currency August 9th, 2013

A positive week for sterling saw it reach a seven week high yesterday of 1.5570 against the US dollar, and a six week high on Wednesday against the euro, reaching 1.1650. This strength followed the Governor of the Bank of England’s report on Wednesday, in which he stated that interest rates could be raised if inflation stayed above 2.5% for another 18-24 months, notwithstanding unemployment levels not having dropped below the 7% target. This override wiped out the initial weakness that resulted from Mark Carney’s mention that interest rates would not be changed until the UK achieved its unemployment target and prompted a number of the major banks to revise their predictions on when we will see the first rise in interest rates. Improved growth forecasts of 1.4% from 1.2% for 2013, and 2.5% from 1.9% added to sterling strength, and ensured a strong performance against the majority of its major trading partners. Today, the only data of note is the UK trade balance data, detailing the net difference between the nation’s imports and exports, as the pound rounds off an important week in what looks like a strong position. Call your trader now to hear a live rate and track on-going fortunes at the end of a good week for the pound.