News Column

Pound Falls As BoE Governor Carney Sounds Dovish On Monetary Policy

June 24, 2014

BRUSSELS (Alliance News) - The pound came under pressure in European deals on Tuesday, as the Bank of England governor Mark Carney told that recent wage data has been bad than previously thought, which shows that there is more spare capacity in the labor market that should be absorbed before normalising interest rates.

Soft wage data shows that "that there has been more spare capacity in the labour market than we previously had thought," the central bank chief said before House of Commons Treasury Select Committee.

"We must make sure that the economy absorbs wasteful spare capacity before we start normalising interest rates," Carney said, adding that the exact timing of the first hike would be directed by the data.

In economic news, UK mortgage approvals declined to the lowest since August 2013 as new mortgage rules started to take effect, the British Bankers' Association said.

Mortgage approvals fell to 41,757 in May, a nine-month low, from 41,934 in April. But it was above the expected level of 41,000.

The pound fell to a 5-day low of 0.8024 against the euro and a 6-day low of 172.93 against the yen, which may be compared to Monday's closing values of 0.7988 and 173.51, respectively. If the pound continues its downtrend against the euro and the yen, 0.81 and 172.00 are seen as its next possible support levels.

The pound declined to 1.5153 against the franc, its lowest since June 12, and a 6-day low of 1.6973 against the greenback. The pound was worth 1.5218 against the franc and 1.7026 against the greenback at yesterday's close. On the downside, the pound is likely to find support around 1.51 against the franc and 1.69 against the greenback.

Looking ahead, US S&P/Case-Shiller's home price index and house price index for April, new home sales for May and consumer confidence index for June are due to be released in the New York session.

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Source: Alliance News

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