Sterling a focus as BOE Governor speaks today

Idea of the Day
The market is going to be focusing on what Mark Carney has to say today in his lunchtime (UK time) speech where he’s expected to focus on his recent move to providing forward guidance on his monetary policy decisions. This change of approach from the BOE is supposed to provide businesses and individuals more certainty in respect of the future path of interest rates, however since that move was made the market has almost outright rejected the governor’s view that UK interest rates will remain as low as 0.5% until unemployment hits 7% which is expected to be in 2016. Recent economic data has been stronger than expected showing that the UK economy is recovering well, especially with last week’s upgrade to Q2 GDP data. We are likely to hear some dovish comments from the governor but what will be more interesting is whether the market discards them just as it did when the forward guidance was provided a couple of weeks ago, thus sending sterling higher again.

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