After last week’s considerable rout in the wake of the bombshell dropped by the Bank of England last week which indicated in its policy statement that it was postponing what otherwise appeared to be an imminent rate hike in order to wait for wage growth to improve. On Sunday, however, Mark Carney, the governor of the BoE, made an about-face and said that he wouldn’t necessarily wait for improvement in real wages before considering a rate hike. Given Carney’s recent inclination to surprise markets with statements that he later retracts, FX traders remain wary. Nonetheless, Sterling did recover slightly as overall sentiment improved.
As reported at 12:01 p.m. (JST) in Tokyo, the GBP/USD recovered to $1.6727, moving away from last Friday’s close in New York at $1.6689; last week, the pair had traded at a 4-month low of $1.6657. The Pound Sterling also firmed against the common currency Euro with the EUR/GBP trading at 0.8008, edging away from last week’s high of 0.8023.
Jackson Hole in Focus
FX traders will turn their attention this week to Jackson Hole, Wyoming where the Federal Reserve Bank’s symposium for major central bankers will be taking place beginning on August 21st. Currency strategists noted that there appears to be increased volatility during the week of the symposium. Analysts expect that the Federal Reserve chief Janet Yellen will focus primarily on labor-related issues which are likely to be supported by the other symposium participants.