Sterling Firm as Carney & Co. Give Evidence to Parliament: GBP LIVE on Tue 26/11
The British pound sterling (GBP) will be prone to bouts of volatility at 10:00 London time when the Bank of England's Monetary Policy Committee, lead by Governor Carney, appear before the Treasury Select Committee to give further insights into their policy making.
Sterling has meanwhile lost momentum against the ever-stubborn EUR but is seeing a return to form against the US Dollar.
Day-on-day exchange rates
- The pound to euro (GBP/EUR): 0.06 pct down @ 1.1945. The pair remains well anchored around 1.19.
- The pound to dollar (GBP/USD): 0.2 pct up @ 1.6188. We will be providing a host of technical views on Cable today.
- The pound to Australian dollar (GBP/AUD): 0.16 pct up @ 1.7664. The path of least resistance is higher.
- The pound to New Zealand dollar (GBP/NZD): 0.02 pct lower @ 1.9822. NZD remains a difficult prospect for GBP.
Please notethat all quotes here are taken from the inter-bank markets. Your bank will levy a discretionary spread when delivering you forex. However, an independent currency specialist will seek to undercut your bank's offer, thus delivering up to 5% more FX.Please learn more here.
14:44: The GBP/USD buy theme is exhausted
"The near-term failure of GBPUSD and AUDUSD to power higher/lower respectively this morning – along with a few other factors – suggests that those two themes are somewhat exhausted for the time being. The general bid/offer bias should, however, generally remain intact through the impending period of year-end noise." - Stephen Gallo at BMO Capital Markets.
12:29: This is it for Sterling
Tom Arnold at Currency Index says GBP may've hit it's yearly highs:
"Sterling struggling to break key resistance levels that have held all year. Many investors feel that the current year long highs are probably the top of the range for now, without some critical data to push the Pound higher."
12:02: No reaction by GBP to Select Committee testimony
Markets got nothing new from the Bank of England's MPC with which to base further decisions on the British pound. The currency remains around levels seen ahead of the MPC's appearance before the Treasury Select Committee.
10:00: The MPC testify before Parliament
The Treasury Select Committee interview Governor Carney, Deputy Governor Charlie Bean, Chief Economist Spencer Dale and policy maker Ben Broadbent about the latest quarterly Inflation Report and the central bank’s new economic forecasts.
The Live Stream has now ended. Here are the best bits of the appearance:
@ 10:31: "7% unemployment is a threshold, not a trigger" - Carney's response to the first really GBP-Relevant question of the morning.
@10:33: Strongly refutes that Forward Guidance is 'dead on arrival' - Forward guidance is working for businesses.
@ 10:38: Meanwhile, over in Scotland, it is revealed by the SNP that an independent Scotland plans to keep the Pound. Alex Salmond says a 'Logical Plan' for currency is detailed in the white paper… "only on page 373!" point out Currency Index.
@10:40: Bank accused of paying scant regard to inflation. Dale reckons inflation is now falling back 'as planned'
@ 10:43: Dale pretty much bins the employment threshold. 'Sustained growth' is what the Bank will look out for when approaching an interest rate hike.
@ 10:48: Carney and Dale tell us that it is rather bizarre that the rest of the UK understands the concept of forward guidance… but the City doesn't. Are forex traders overcomplicating what is actually a very simple concept?
@10:51: Even though the concept is simple the technicals of Forward Guidance do matter i.e employment rate threshold at 7%. Carney says this is important from a disciplinary perspective. I'm confused.
@10:56: "Bank of England an asset for the Scottish people." - says Salmond punting for an independent Scotland. Surely controlling your own monetary policy is a cornerstone of independence? He's a sneaky customer.
@10:59: "I would be horrified, as would millions, if a Conservative/Coalition Government allowed you to keep Sterling or be regulated in London, let alone use the facilities of the gilt-edged market, to fund your requirements at preferential rates – “On yer bike!”" - David Buik at Panmure Gordon tells Alex Salmond he can't play it both ways.
09:36: Outlook for the GBP/USD
Luc Luyet at MIG Bank gives his forecast for the GBP/USD rate today:
"GBP/USD weakened yesterday close to the key resistance at 1.6260. However, the support implied by the rising channel (around 1.6129) has not been broken. Another support can be found at 1.6073.
"In the medium-term, prices are moving within the horizontal range defined by the support at
1.5894/1.5855 and the resistance at 1.6260 (01/10/2013 high).
"In the longer term, given the deep overbought conditions, we continue to see a limited upside potential near the resistance at 1.6260 (01/10/2013 high). A decisive break of the support at 1.5894 is needed to deteriorate the long-term technical structure."
08:32: What to expect with regards to the QIR testimony
The Quarterly Inflation Report (QIR) saw the unemployment rate projections shifted markedly, with the Committee now seeing the likelihood of the 7% unemployment rate threshold being hit in Q3 2015, previously projected for Q2 2016.
"This shift is likely to attract significant scrutiny from Treasury members. But with the BoE stance largely detailed in the QIR, and the committee members likely to reiterate the same ‘old’ message we would expect a relatively muted market reaction," say Lloyds Bank Research.
08:22: British pound remains the currency to beat
Momentum still rests with the UK currency; the only question is whether the rally is over and a correction is due to take shape.
The pound has gained 6.3 pct in the past six months, the best performer of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes.
The euro gained 3.9 pct and the dollar fell 1.3 pct.
08:15: Carney and Co. to appear before parliament at 10:00
Tuesday brings with it some potential Bank of England related event risk for the British pound (GBP).
The Treasury Select Committee will interview Governor Carney, Deputy Governor Charlie Bean, Chief Economist Spencer Dale and policy maker Ben Broadbent about the latest quarterly Inflation Report and the central bank’s new economic forecasts.
We doubt the team will give anything new away, ie. any hints that the Bank is considering introducing tighter policy sooner. That said, any surprises could send GBP either higher or lower.
The Bank of England published its quarterly Inflation Report on Nov. 13. Sterling rose 1 pct versus the dollar and 0.6 pct against the euro on that day.