Carney keeps the pound pressured

On their marks Unite members and workers in Carney masks picket the Bank’s head office in the City of London
Carney under fire in first Bank strike for 50 years by Daniel Binns Published
Author

04 August, 2017

The MPC vote split 5-3 at the last decision to keep rates unchanged but since then the central bank's chief economist Andy Haldane has signaled his readiness for a hike to curb the effects of high inflation.

The Bank's inflation report said it expected economic growth of 1.7 per cent in 2017 and 1.6 per cent in 2018, down from the 1.9 per cent and 1.7 per cent in previous forecasts.

However, in the minutes on the policy meeting the Bank said some monetary tightening may be needed in the next three years if the economy improved as expected.

The UK 2-year gilt yield also dropped back to match the bank base rate at 0.256.

In the U.S., the Federal Reserve is on course to raise short-term rates later this year, while the European Central Bank is to begin phasing out its huge bond-buying programme in 2018.

It also fell around a cent against the dollar, plumbing a three-day low of $1.3140, having earlier reached an 11-month high of $1.3267 against the United States currency.

The MPC's forecasts are based on the assumption of a smooth exit from the European Union with Carney arguing it is in both sides' interests to have a clear transition to "whatever the end state is". Inflation projections were slightly revised upwards for the current year to 2.7% on an annual basis from 2.6% before, while the central bank's expectations for annual inflation in 2018 remain at 2.6%.

US Navy Ship Fires Warning Shots Over Iranian Patrol Boats
According to CNN , the USS Vella Gulf and two other US ships were accompanying the Thunderbolt at the time of the incident. The Iranian vessel did not respond when bridge-to-bridge communication was initiated by the US crew, the official said.

"Firms" prospects for the coming year have slipped to a level which has previously been indicative of the economy stalling or even contracting, having taken a lurch downward since the general election, largely reflecting heightened uncertainty about the economic outlook and Brexit process'.

For the pound, it's going to boil down to how things unfold in today's MPC meeting and Carney's comments in this morning's press conference, while the Dollar Bulls will be looking ahead to tomorrow's nonfarm payroll and wage growth figures, the Euro on track to hit $1.20 levels in August and sooner rather than later should the ECB's Economic Bulletin and today's finalized service sector PMI figures impress and nonfarm payrolls and wage growth disappoint tomorrow, an outcome that is more than a possibility. Kristin Forbes, the third member voting in favor of a rate rise during the June meeting, has since departed after completing her term as an MPC voting member.

Pound/dollar immediately fell upon the decision announcement and extended its losses as Governor Carney was talking, falling to as low 1.3111. As a result, I think the BoE will lower their GDP forecast for the rest of the year, and probably inflation, which could dampen rate hike expectations for the months to come. The Committee voted unanimously to close the drawdown period for the Term Funding Scheme (TFS) on 28 February 2018, as envisaged when the scheme was introduced.

It blamed the downgrade on Britain's stubbornly weak productivity and in part on the Brexit uncertainty.

Inflation is expected to remain around 2.75 percent until early next year.

There were only marginal changes to the latest inflation forecasts from those produced in the May inflation report.


More news


  • Fox News Hit With Lawsuit Over Retracted Seth Rich Story

    Fox News Hit With Lawsuit Over Retracted Seth Rich Story

    According to Wheeler , he and Butowsky met with former White House Press Secretary Sean Spicer before the story was published. Butowsky told the outlet that he did not share a draft with Trump and he was "joking" about the president's involvement.
    Casey Affleck divorce (finally) : The curse of the Oscars struck again !

    Casey Affleck divorce (finally) : The curse of the Oscars struck again !

    If she asks for the custody of their two children, the actress also requires maintenance. Affleck, 41 , and Phoenix, 38, have two sons , 13-year-old IN and 9- year-old Atticus .

    Jose Mourinho sends message to Alvaro Morata after joining Chelsea

    Chelsea head coach Antonio Conte says that Alvaro Morata requires time to adapt to life with the Blues before producing his best performances.
  • Increasing rain chances & cooler temperatures this week

    Increasing rain chances & cooler temperatures this week

    Friday , a chance of showers and thunderstorms before 2 p.m., then showers likely and possibly a storm after 2 p.m. Lows through this period will be in the low 70s with mostly cloudy skies and lingering rain chances.
    Scaramucci Rising: Anti-Leak Crusader Curries Favor With Trump

    Scaramucci Rising: Anti-Leak Crusader Curries Favor With Trump

    Trump is a passive president who wants Congress to do all of the work while he watches Fox News or plays golf every weekend. Scaramucci cited the same tidbit as evidence of their existing ties when he gave his first press conference later that day.

    US Sanctions On Russia Could Be "Wide And Indiscriminate"

    Before Trump definitively takes a decision it is too early to talk about any potential counter measure from Moscow, Peskov said. European business was considerably alarmed by the situation with the anti-Russian sanctions , the Russian envoy said.
  • Donald Trump imposes sanctions on Russian Federation  as punishment for meddling in election

    Donald Trump imposes sanctions on Russian Federation as punishment for meddling in election

    Trump issued a second statement on the bill , attacking the bill further. Appearing on ABC's "Good Morning America" the same day, Mr. Sekulow said: "The president didn't sign off on anything".

    Afghan official blast at Shiite mosque kills 20

    The explosion happened at the Baqir-ul-uloom mosque in the Darul Aman area as people gathered for a religious ceremony. He said at least 25 others who sustained injuries in the attack were also shifted to the hospital for the treatment.
    Here's Why Chrissy Teigen Got Blocked by Donald Trump

    Here's Why Chrissy Teigen Got Blocked by Donald Trump

    UsWeekly reported that alongside the tweet was a screenshot that said, "You are blocked from following @realDonaldTrump and viewing @realDonaldTrump's tweets".
  • Charter Communications declines a merger with Sprint

    Charter Communications declines a merger with Sprint

    Analysts had been expecting a loss of 1 cent a share on revenue of $8.16 billion, according to Factset. Shares of Sprint Corp . rose 82 cents, or 10 percent, to $8.80 in late morning trading.

    Starbucks to close all Teavana stores, including location in White Oaks Mall

    Starbucks will continue to sell Teavana drinks in its Starbucks stores as well as bottled Teavana drinks in grocery stores. While DavidsTea does have mall-based locations, the company doesn't restrict itself like Teavana does.
    HTC has announced a standalone VIVE VR headset, exclusive to China

    HTC has announced a standalone VIVE VR headset, exclusive to China

    We do know that the Chinese version lacks the Google WorldSense tech that the standalone coming to the USA will boast. As is the case with all tethered headsets, it requires a powerful PC setup to function.