In the aftermath of a dovish speech by Bank of England Governor Mark Carney, the Pound has generally slumped against the majority of its most traded currency peers. However, on Monday the Pound advanced as a result of speculation that the UK Gross Domestic Product data, due for publication on Wednesday, will print above the median market forecast.
The Pound Sterling to Euro exchange rate is currently trending in the region of 1.2599.
The Pound Sterling to US Dollar exchange rate is currently trending in the region of 1.5722.
The Pound Sterling to Australian Dollar exchange rate is currently trending in the region of 1.8434.
Pound (GBP) Slumps on Carney Comments
On Tuesday, Bank of England Governor Mark Carney, and other officials, made a speech to the British Parliament Treasury Committee in London. In regards to monetary policy, Carney was particularly dovish which caused the Pound to soften against the majority of its most traded currency rivals. The Governor suggested that global economic disparity, with particular reference to weakness in the Eurozone, will have a detrimental effect on the UK. This is the principle obstacle preventing a benchmark rate increase, in accordance with Carney.
‘In recent months, global economic conditions have deteriorated in two of the major economies — Europe and Japan,’ he told lawmakers in London today. ‘The geopolitical situation remains difficult. The combination of that suggests a heightened degree of external risks to the U.K.’
‘The biggest risks I worry about today are external,’ said Kristin Forbes, a member of the Monetary Policy Committee and former White House economic adviser, speaking alongside Carney. She cited a ‘sharp downturn’ in the Euro area, Britain’s biggest export market, and added, ‘I worry about geopolitical risks.’
Pound Sterling (GBP) Forecast to Strengthen
If Wednesday’s British Growth data prints in line or exceeds expectations, the Pound is likely to rebound from Tuesday’s slump. UK Gross Domestic Product is forecast to repeat the previous growth of 3.0%, but some experts expect a slight improvement.
