After softening against the US Dollar for five days, the Pound was able to end its recent losing streak and edge higher against peers like the ‘Greenback’ and Euro.
Sterling was supported against its major currency counterparts as Bank of England Governor Mark Carney’s interview with the Australian press was made public.
As well as asserting that the world’s largest banks need to accept the proposed new capital requirements and recognise that they’ve had things easy for too long, Carney stressed that the BoE remains committed to the UK’s economic recovery.
When asked about the forward guidance policy which tied interest rate increases to falling unemployment, Carney observed; ‘I met over 700 businesses and the message went through loud and clear: it made them more keen to hire, and more keen to invest. We are now the fastest-growing major economy, we have the fastest employment growth on record, inflation back at target, and inflation expectations well anchored. It’s hard to find a criteria by which you would not judge it successful’.
Carney went on to state; ‘We’ve made it through the easy phase of guidance, which is to say what we would not do. Now it becomes a question of what will we do and how and under what criteria as the economy continues to recover […] we will not take risks with the recovery […] we are going to set the path of monetary policy in a way that ensures that we see sustainable growth in jobs and incomes and in spending.’
Carney’s statements were published in newspapers including the Australian Financial Review and bolstered the Pound against its peers.
The British asset was also supported by the expectation that Wednesday’s UK GDP data will show that the UK economy expanded in the fourth quarter, albeit at a slower pace than in the previous three months.
Economists have forecast that the UK economy grew by 0.7 per cent in the final three months of 2013 following growth of 0.8 per cent in the third quarter.
A negative surprise could pile pressure on the Pound.
However, as European trading progressed on Monday Sterling trimmed gains against the Euro as the common currency was boosted by upbeat German business confidence figures.
Before Wednesday Pound movement is likely to be a little limited, although some currency movement could occur tomorrow following the release of BBA loans for house purchase figures and CBI reported sales data.
As the week progresses other UK reports to be aware of include the Lloyds business barometer, Nationwide house price figures and the GfK consumer confidence survey.
The confidence measure is expected to have held at -7 in February.
Pound (GBP) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,US Dollar,1.6669 ,
Pound Sterling,,Euro,1.2109,
Pound Sterling,,Australian Dollar,1.8558,
Pound Sterling,,New Zealand Dollar,2.0068 ,
US Dollar,,Pound Sterling,0.6002,
Euro,,Pound Sterling,0.8255,
Australian Dollar,,Pound Sterling,0.5392,
New Zealand Dollar,,Pound Sterling,0.4983,
[/table]
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