25 Feb 2015
Pound stronger as BoE members continue to sway towards a rate hike – Investec
FXStreet (Barcelona) - Jonathan Pryor, Head of FX dealing at Investec, summarizes yesterday’s events and the subsequent price action in GBP and EUR.
Key Quotes
“Mark Carney at the Bank of England reiterated the stance from the Quarterly Inflation Report, with the only slight surprise of the day the more hawkish tone from BOE's Forbes that helped the Pound remain supported.”
“So what were Yellen's key points?
She repeated that rate hikes are unlikely "for at least the next two meetings", nothing new there.
She repeated the economic assessment presented in the January FOMC statement. Again, nothing new.
She said the FOMC would signal a rate hike with a change in its forward guidance by dropping the word 'patience' from their statement. Once this is done the FOMC could raise rates at any meeting.
Finally she re-emphasised data dependency for a hike in rates, you guessed it - nothing new there either!”
“So how did currency markets react?
Well the Pound stayed relatively strong throughout, as BOE members continue to sway more towards a rate hike than the market has priced.
The US Dollar, after a very brief rally, ended lower after market participants were left disappointed by Yellen. Essentially the market had already priced in what was said.
The Euro continues to trade soft although received a minor boost from the US Dollar retracement.”
Key Quotes
“Mark Carney at the Bank of England reiterated the stance from the Quarterly Inflation Report, with the only slight surprise of the day the more hawkish tone from BOE's Forbes that helped the Pound remain supported.”
“So what were Yellen's key points?
She repeated that rate hikes are unlikely "for at least the next two meetings", nothing new there.
She repeated the economic assessment presented in the January FOMC statement. Again, nothing new.
She said the FOMC would signal a rate hike with a change in its forward guidance by dropping the word 'patience' from their statement. Once this is done the FOMC could raise rates at any meeting.
Finally she re-emphasised data dependency for a hike in rates, you guessed it - nothing new there either!”
“So how did currency markets react?
Well the Pound stayed relatively strong throughout, as BOE members continue to sway more towards a rate hike than the market has priced.
The US Dollar, after a very brief rally, ended lower after market participants were left disappointed by Yellen. Essentially the market had already priced in what was said.
The Euro continues to trade soft although received a minor boost from the US Dollar retracement.”