BREAKING NEWS
latest

728x90

header-ad

468x60

header-ad

Thursday, January 9, 2020

Pound Slides After Carney Sounds Downbeat on Brexit Rebound

3/3 2/3

(Bloomberg) -- The pound fell to a two-week low as outgoing Bank of England Governor Mark Carney signaled that an interest-rate cut could still be on the horizon.

Sterling fell versus all of its Group-of-10 peers as Carney said in a speech that the central bank was debating the merits of near-term stimulus, adding that a rebound from Brexit uncertainty wasn’t guaranteed and that U.K. economic growth was below potential. That led money markets to price in a higher chance of a BOE rate cut by the end of the year.

“The comments are a stark reminder that the U.K. and by implication the global economy are still quite fragile as they remain buffeted by geopolitical risks,” said Valentin Marinov, head of Group-of-10 currency strategy at Credit Agricole (PA:CAGR) SA. “The pound could remain vulnerable in the run up to the next policy decision at the end of January.”

The pound fell as much as 0.6% to $1.3018, the lowest since Dec. 27. It also weakened as much as 0.6% to 85.28 pence per euro. The market now prices about a 60% chance of a BOE rate cut by December 2020, and a 15% chance of a move this month compared to just 6% a day ago.

The downbeat Carney comments strengthen the case for an interest-rate cut in the first half of 2020, and should lead to another leg higher in the euro-pound pair, according to Danske Bank A/S.

The pound’s drop is a turnaround after posting its best quarter in a decade in late 2019, when optimism the Conservatives would win a decisive election majority and break the Brexit deadlock turned into reality. The euphoria has since given way to fears the U.K. won’t be able to reach a trade pact with Brussels by the end of 2020.

Original Article
« PREV
NEXT »

Facebook Comments APPID