Carney Causes Collapse

8 November, 2019

Simon Eastman

Yesterday we saw sterling start the day off well, back hovering up at the top of the current trading range we have seen for the last few weeks against the euro.

Markets have little to go on currently, with Brexit on the back burner whilst the UK gears up for a General Election in early December. With the main parties giving press conferences over the last week and the campaign officially starting yesterday, as Boris Johnson visited Buckingham Palace to absolve Parliament, we’ll probably start to see some sterling movement over the coming weeks as the election trail starts.

Up until yesterday, data releases have been of little interest to the markets, with most releases going unnoticed, but yesterday was different. It was Mark Carney’s last Bank of England meeting and a few expected him to go out with somewhat of a bang.

As it happened, it was two other members of the MPC which caused the stir initially, with Saunders and Haskell both voting to cut interest rates by 25 basis points, opposed to the exepcted unanimous vote to keep rates unchanged. In addition, Carney had the last say as he commented in his closing press conference we should be wary of the global economic downturn and that a No Deal Brexit would likely bring job losses and business closures.

As a result the pound plummeted against all the major pairings, losing nearly a cent against the euro and just half a cent against the greenback, which has its own problems with the US/China trade war and current Fed stance on interest rates.

Fortunately for those euro buyers amoung you, the pound managed to rally back most of its losses, back to the key resistance point we have been battling against these past weeks. Against its other pairings it wasnt so bullish and remained weaker over the rest of trade.

So as we wrap up this somewhat cold week, we have a couple releases to note today. This morning the German trade balance figures have already been and gone, as we look towards a speech by Fed member Brainard and Canadian unemployment figures at 1.30pm, where employment is expected to have improved.  Any change to this could affect those Loonie buyers out there, so get in touch with one of our currency consultants this morning to disucss your specifics and the options available to assist.