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Carney not worried about inflation, exchange rate – GBP/USD

The inflation report is apparently pound positive. GBP/USD jumped from 1.5235 to nearly 1.53, but if beginning to slide back. Update: the pair enjoys a second wind of gains, crossing 1.5320. This is already turning into a gain of over 100 pips.

Mark Carney and his colleagues seem bullish on the UK economy and see through the fall in oil prices. It’s “good news for British households”.

Here are some headlines from BOE Governor Mark Carney’s press conference that accompanies the release of the Quarterly Inflation Report.

  • Inflation will likely fall further and be negative in the spring
  • More inflation letters are on the way.
  • The headline mask  strong UK economy
  • Global growth has been better
  • Geopolitics are worrying. It’s coming just after a ceasefire has been agreed on Ukraine.
  • Oil  prices halved – unambiguously positive for the economy.
  • ECB QE is good news.
  • Global real interest rate have fallen further
  • Financial conditions have improved despite higher volatility.
  • Half a million new jobs created in the past year
  • Wages are beginning to pick up.
  • Wages and oil will boost solid spending
  • Core of the financial system is resilient.
  • Regarding EUR/GBP: appreciation of sterling pushed inflation lower, but it’s not the most important factor. “We do monitor it” but Carney does not seem worried.
  • Wage growth pickup is still in its early days.
  • No reason to believe that the  inflation report was leaked.
  • The jobs market is tightening in  the way the Bank had expected it to do.
  • Carney does see inflation rising above 2% in the 3 year horizon.
  • Around 60% of components of the CPI are rising exactly at the historical averages.
  • This is not a debt fueled expansion.
  • Conscious of risk of persistence of low wage growth.

Recent UK data has been positive lately.

Here is how the move looks on the chart:

GBPUSD rises nicely on BOE inflation report February 12 2015 Mark Carney


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Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.