Reuters logo
Sterling hits 20-month low on dovish BoE chief Carney
March 12, 2015 / 10:22 AM / 3 years ago

Sterling hits 20-month low on dovish BoE chief Carney

LONDON (Reuters) - Sterling hit its lowest against the dollar since July 2013 on Thursday after Bank of England Governor Mark Carney signalled he was in no rush to raise interest rates, disappointing some expectations of a hike in early 2016.

An employee is seen walking over a mosaic of pound sterling symbols set in the floor of the front hall of the Bank of England, in London in this March 25, 2008 file photograph. REUTERS/Luke MacGregor/Files

Sterling fell to $1.4887, down 0.3 percent on the day against a dollar. The greenback was weaker versus most of the world’s major currencies as it took a breather after scaling multi-year highs on Wednesday.

The pound had earlier risen against the dollar after data showed that U.S. retail sales fell unexpectedly in February for a third straight month, but Carney’s comments drove sterling back towards 20-month lows in afternoon trade.

Carney said he was not in a hurry to raise interest rates, and that the impact of sterling’s rise and low global inflation could last for some time.

He added that the Bank expected to make limited and gradual increases in rates over the next three years as inflation returned to target within two years, even though it fell to 0.3 percent in January.

“Sterling underperformed today. Other currencies made progress against the dollar but the pound did not benefit from that and the comments from Carney could have contributed to that underperformance,” said Ian Stannard, European head of FX strategy with Morgan Stanley in London.

“The fact that Carney is warning about the impact of low inflation for a prolonged period of time is very important and consistent with what we believe will be a challenging environment after the election.”

The pound had been given a boost against the dollar earlier in the day after data showed the UK’s trade gap narrowed to its smallest since mid-2013 in January.

A separate survey showed British house prices rose more than expected in February, suggesting a growing shortage of properties might herald the end of a slowdown in the market.

“(The trade data) is another positive in the UK outperformance story,” said Stephen Saywell, global head of FX strategy at BNP Paribas in London.

Additional reporting by Jemima Kelly; Editing by Alison Williams

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below