24 Jan 2014
GBP/USD down on Mark Carney's comments in Davos
FXstreet.com (London) - GBP/USD remains down on the day following Bank of England governor Mark Carney’s speech at Davos.
Speaking at a Confederation of British Industry lunch, Carney talked down the possibility of an early rate hike, despite the faster-than-expected decline in unemployment.
No early hike
With the unemployment rate at 7.1 percent – a hair’s breath from the 7 percent threshold at which Carney has said he will consider hiking rates, there had been some expecting a hike to be brought forward earlier into this year. However the BoE governor said that the UK recovery had to be allowed to run further and that there was some way to go before he would consider moving to hike rates.
The words triggered broad selling of sterling, despite echoing Carney’s stance throughout the second half of 2013.
Focus on labour market conditions
It is expected that Carney will now shift focus away from headline employment numbers and instead to labour market conditions – in particular to real wages. Although the last jobs report showed a big drop in unemployment, wage growth remained at 0.9 percent – compared to 2.0 percent CPI inflation.
GBP/USD is currently trading at USD1.6508, recovering slightly from a low of USD1.6497. GBP/USD is down 0.79 percent on the opening of USD1.6638.
Speaking at a Confederation of British Industry lunch, Carney talked down the possibility of an early rate hike, despite the faster-than-expected decline in unemployment.
No early hike
With the unemployment rate at 7.1 percent – a hair’s breath from the 7 percent threshold at which Carney has said he will consider hiking rates, there had been some expecting a hike to be brought forward earlier into this year. However the BoE governor said that the UK recovery had to be allowed to run further and that there was some way to go before he would consider moving to hike rates.
The words triggered broad selling of sterling, despite echoing Carney’s stance throughout the second half of 2013.
Focus on labour market conditions
It is expected that Carney will now shift focus away from headline employment numbers and instead to labour market conditions – in particular to real wages. Although the last jobs report showed a big drop in unemployment, wage growth remained at 0.9 percent – compared to 2.0 percent CPI inflation.
GBP/USD is currently trading at USD1.6508, recovering slightly from a low of USD1.6497. GBP/USD is down 0.79 percent on the opening of USD1.6638.