Carny made a special appearance and offers easing during the summer as a reaction to Brexit. He makes a heavy hint that they will take a decision in August. This speech was scheduled only yesterday and is seen as part of the damage control.
GBP//USD slips to 1.3330. Update: it already slips to 1.33. Another update: the pound is already down to 1.3260. We wrote yesterday about why the rally happened and why it is set to fall – this was certainly a sell opportunity now worth over 250 pips.
Carney Highlights
The governor of the BOE offers some soothing words for markets and also some action.
With his doubts about ever lower rates, perh
- High level of uncertainty that will last for some time
- Clarity needed on the EU trade deal, regulation
- We have contingency plans and these are working well.
- Liquidity provisions will continue through September.
- Results of the referendum are clear, prospects not so
- Additional measures will be made
- BOE cannot fully mitigate a large economic shock.
- Too low rates can hit bank profitability.
- The efficacy of monetary policy is diminished with ever low interest rates.
- Uncertainty may have more persistent drag on the economy.
- July 14th scheduled rate decision will be the first opportunity to assess the impact
- In August, alongside the Quarterly Inflation Report, the BOE may act.
Market reactions to Carney
- A 1% fall in the pound
- 10 year UK bonds at a record low
- FTSE jumps
more coming
Here is how it looks on the chart.
(Click on image to enlarge)
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