Summary:

• Carney says UK outlook hasn’t changed
• Governor strikes similar tone to statement
• GBP remains lower on the day

We earlier noted that the pound had dipped lower following the latest BoE rate decision which saw rates kept on hold as expected. Attention then turned to the press conference from Governor Carney and fellow MPC members, but there was little by the way of further insight offered into their future approach and sterling remains under pressure at the beginning of the US session. 

Carney attempted to strike a positive tone and was maybe looking to send a signal that this was a hawkish hold, claiming that the softness in Q1 was likely weather related and that the bank forecast as likely another couple of rate hikes in the next 18 months. Selected comments from the press conference were as follows:

• UK economy overall looks little changed
• Brexit drag on investment, still there, but not worse
• UK to need ’modest tightening’ over forecast period

However, this was’t enough to cause a sustained recovery in the pound which remains lower across the board.  

 The Pound has fallen lower across the board today following the latest BoE decision. Source: xStation

One GBP pair that can be overlooked is the GBPJPY and this is currently trading at an interesting level. The market had been moving higher in recent trade ahead of the BoE, but the gains were against the prevailing trend which is lower. A fib taken from the highs seen from the double top last month shows that the 38.2% level come in at 149.22. This area acted as resistance and the market has experienced some notable selling pressure around it, now falling back below the 23.6% at 143.38. 

 

 GBPJPY had bounced higher against the prevailing downtrend but since the BoE meeting the cross has turned lower once more. Source: xStation