Sterling slips on dovish Bank of England member comments

  • All posts
    All posts|Currency Updates
    All posts|Currency Updates|International Trade
    All posts|In The News
    All posts|International Trade
    Charities & NGOs
    Currency Updates
    Currency Updates|In The News
    In The News
    In The News|Press
    International Trade
  • Latest

27 June 2018


Sterling sank by almost half a percent versus the US Dollar on Tuesday morning, after an incoming member on the Bank of England’s rate setting board struck a cautious tone over the need for higher interest rates in the UK this year.

ewly appointed MPC member John Haskel, Professor of Economics at Imperial College Business School, will replace outgoing policymaker Ian McCafferty in September. Speaking to the British parliament’s Treasury Select Committee, Haskell cited uncertainty over the Brexit negotiations, which ‘may at least [lead to] a temporary lull in the economy’. With McCafferty undoubtedly one of the more hawkish members of the committee, Haskell’s initial comments would suggest he is likely to err more on the side of caution when it comes to voting for higher rates, which could shift the broad consensus of the MPC slightly towards a more dovish bias.

Ian McCafferty himself also spoke yesterday morning, although his hawkish tone came as no surprise, given his repeated calls for higher interest rates in the past. He stated that it ‘should not dally’ in raising rates, and that the recent downtrend in CPI data would slow over the course of the year. McCafferty was one of the three members of the rate-setting board to vote for a hike in rates at last week’s BoE meeting.

Governor of the Bank of England, Mark Carney, will add to a busy couple of days of central bank speakers this morning. Other than that, the Pound will be driven more by events elsewhere.

Modest risk appetite returns, but trade concerns drag on

The Euro edged back below the 1.17 level against the US Dollar on Tuesday, with investors still uncertain on what kind of impact the ongoing trade tensions will have on the currency’s respective economies. A modest easing in concerns revived some risk appetite yesterday, although with the trade conflict expected to be a long and drawn out, this may only prove temporary. The common currency also remained under pressure from comments earlier in the week from the Head of Lithuania’s central bank, who stated that he believed there would be no discussion on the need for higher rates at the ECB until October 2019.

With only second tier economic data out of the Eurozone today, the Euro could be reliant on economic surprises from elsewhere, namely this afternoon’s US durable goods order data. Pending home sales and a couple of speeches from Federal Reserve members Quarles and Rosengren could also shift the US Dollar.