There was actually plenty for the pound to work with in the latest statement from the central bank. Growth in 2017 is now expected to be at 2%, a colossal upgrade from the 1.4% forecast last November; unemployment, meanwhile, should be stable around 5% for the next couple of years instead of creeping towards 5.5% as previously stated. Carney even claimed that rates could rise if pay growth begins to swell faster than expected, especially since all MPC members agreed that ‘there were limits to the degree to which above-target inflation could be tolerated’. And considering that 2% target will likely be broken this month that should be good news for the pound – right?
Well, no. For while the Bank of England spent most of the afternoon revising things higher, one figure was taken lower; by the start of 2018 the central bank now expects inflation to be at 2.7%, not 2.8%. Combine this with comments from Carney suggesting he could also see scenarios where rates move in ‘either direction’ and things were more dovish than the pound would have liked. Sterling dropped 0.9% against the dollar, a sharp turnaround given that it hit 7 week highs earlier in the morning, while it shed 1.3% against the euro. All this was catnip for the FTSE, which loves nothing more than preying on sterling’s struggles; yet though the index jumped 50 points it is still failing to significantly break through the 7150 mark.
Elsewhere, the Dow Jones couldn’t do much of anything after the bell, slipping back by another 20 points to remain on the wrong side of 19900. The index is continuing to suffer thanks to Trump’s confrontational international stance, the president now stating that America is ‘taken advantage of by every nation in the world virtually.’