Disappointment as Mark Carney’s dovish commentary weakens the pound.
International Foreign Exchange (IFX), one of the world’s leading specialist foreign exchange consultancies, comments on today’s quarterly inflation report, delivered by the Bank of England’s Mark Carney.
“The pound slipped to a four-week low against the dollar this morning as markets were left disappointed following the Bank of England’s (BoE) inflation report. It has been a common theme for BoE governors in the past to use the occasional dovish commentary to weaken the pound, which is a preference for a recovering economy. Some may question, with such a strong history of aiming to keep our currency down, why so many repeatedly fall into the same trap of disappointment.
Mr Carney kept to this tradition today when the UK central bank left its growth and inflation forecasts broadly unchanged, meaning a rise of its main benchmark rate is still expected in the first half of 2015. This surprised markets who had, perhaps over ambitiously, been hoping for signs of the UK’s first rate hike in 7 years to be bought forward to January 2015. Sterling fell to $1.6757 after trading at a high of $1.6874 earlier in the session.
The pound has jumped 13 percent over the last 12 months as the UK economy has finally bounced back and is set to clock up a healthy 3 percent growth rate this year.
While the recent 10 percent surge in the UK housing market is stoking concerns of a housing bubble, retail sales growth and consumer price inflation remain weak. The BoE could move to tame housing market inflation by scaling back its Help-to-Buy scheme and imposing mortgage restrictions, rather than tightening monetary policy. So in reality if these areas of the UK economy continue to show some slack, it is understandable that Mark does not want to increase interest rates any earlier.
From here Sterling looks to be at fair value. We would hope to see it hold ground, whilst any large recoveries will need to be helped by better than expected economic data due to be announced later this month.”
Richard Nehme, Dealing Director, International Foreign Exchange (IFX).
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Notes to Editors:
IFX CEO Nick Williams, COO Thomas Greenwood and Dealings Director, Richard Nehme are available for expert comment on topics including international money transfer, exchange rate fluctuations, foreign investment and overseas property.
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About IFX
Launched in April 2005, International Foreign Exchange (IFX) is one of the world’s leading and fastest growing specialist foreign exchange consultancies in the UK, with 50-60 percent year on year growth for the last three years.
IFX specialises in advising on and coordinating high value currency transfers for a growing portfolio of corporate and private clients throughout the UK, Europe, the Middle East and Australasia.
Providing a tailored service for all clients, combining a depth of specialist expertise with world-class trading systems, market insights and dedicated account management, IFX’s growing client portfolio includes FTSE 250 companies, Premier League football clubs, large insurance and film production companies, and celebrities.
Headquartered in London, IFX is expanding rapidly, with offices in Dubai (opened May 2013) and Warsaw (opened March 2014), with a view to opening an additional five new offices worldwide within the next three years. IFX is the first and only fully authorised and regulated foreign exchange consultancy in Dubai.
IFX (UK) Ltd. is authorised by the Financial Services Authority for the provision of payment services, and is registered as a Money Service Business with HM Revenue & Customs.
