Mark Carney proves Bank of England are holding out for improvements

19 September, 2013

Graham Harborne

Yesterday saw the release of the Bank of England (BoE) minutes from this month’s meetings and as expected it didn’t throw up any surprises. A 9-0 vote on keeping rates unchanged was the outcome and no change in the QE policy as expected. It seems new BoE governor Mark Carney is quite content on showing his hand and this is likely to mean we are unlikely to see any shocks in the coming months and if there are going to be any changes to policy he is almost certainly going to drop hints before making them. Having said that we did see the pound rally as it seems that both investors and the markets like this ‘open book’ attitude of Mr Carney. The rest of the trading day was fairly subdued with little in the way of data from Europe or the States. The fireworks all happened early evening when the FED decision, no change, was announced but more importantly the dovish tone of the press conference held by Ben Bernanke. After a number of months of Bernanke dangling the carrot of change he took a huge step backwards claiming that rates will remain at their low levels until unemployment falls and he also stated that this would likely take 2 years. The US Dollar got hammered from all sides with both the GBP and EUR breaking through key resistance levels and pushing on to fresh highs. The Euro was the main winner though and we did see the pound fall off against the Euro back to levels it had begun the day at. Today we have UK retail sales out this morning and with figures expected to again be positive we could see the pound push on against the Dollar but it will be interesting to see how it fairs against the buoyant Euro. The afternoon sees a raft of U.S data releases so we could well be in for a volatile day. Remember to keep in touch with your account manager here at Currency Index to ensure you know what is happening with the currency pair you require.