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1 Sep 2015
GBP weakness to be temporary – BTMU
FXStreet (Edinburgh) - Currency Analyst at BTMU Lee Hardman has evaluated the recent comments by BoE’s M.Carney at Jackson Hole.
Key Quotes
“The pound has been one of the worst performing major currencies since China devalued the renminbi last month”.
“Heightened financial market volatility and more risk-averse trading conditions have weighed on the pound”.
“The Short Sterling futures strip has also shifted to remove around 20 basis points of monetary tightening by the end of next year”.
“The more dovish outlook for BoE monetary policy has also temporarily undermined the pound. However, the comments from BoE Governor Carney at Jackson Hole over the weekend signal that market expectations for BoE policy may have become too dovish now”.
“Governor Carney stated that “developments in China are unlikely to change the process of rate increases from limited and gradual to infinitesimal and inert”. He reiterated that “the prospect of sustained momentum in the UK economy and gradual firming of inflationary pressures will likely put the decision as to when to start the process of gradual monetary policy normalisation into sharper relief around the turn of this year”.
“The comments signal that recent pound weakness is likely to prove short-lived”.
Key Quotes
“The pound has been one of the worst performing major currencies since China devalued the renminbi last month”.
“Heightened financial market volatility and more risk-averse trading conditions have weighed on the pound”.
“The Short Sterling futures strip has also shifted to remove around 20 basis points of monetary tightening by the end of next year”.
“The more dovish outlook for BoE monetary policy has also temporarily undermined the pound. However, the comments from BoE Governor Carney at Jackson Hole over the weekend signal that market expectations for BoE policy may have become too dovish now”.
“Governor Carney stated that “developments in China are unlikely to change the process of rate increases from limited and gradual to infinitesimal and inert”. He reiterated that “the prospect of sustained momentum in the UK economy and gradual firming of inflationary pressures will likely put the decision as to when to start the process of gradual monetary policy normalisation into sharper relief around the turn of this year”.
“The comments signal that recent pound weakness is likely to prove short-lived”.