Pound took a beating after Super Thursday turned out to be a nightmare – Investec

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Nov 6, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Delhi) – Research Team at Investec, notes that unfortunately for Sterling bulls Super Thursday came as a nightmare as Governor Mark Carney et al pushed back on previous interest rate expectations, to fall much closer in line with market pricing of an end of 2016 first interest rate hike.

    Key Quotes

    “The Bank of England kept interest rates on hold with the same 8-1 vote as last month, the committee downgraded CPI inflation forecasts and Governor Carney's accompanying press conference had a very dovish feel as the Bank of England admitted that market pricing of a late 2016 rate hike would only see a very small overshoot of inflation projections.”

    “Governor Carney also highlighted the deflationary pressure of a strong Pound (discussing the strength of your currency is usually a good way of encouraging the market to sell it). The Investec Economics team have subsequently pushed back their expectations for a first rate hike by the BOE from Q1 2016 to Q2 2016, although risks seem to lie with that being a little optimistic with market pricing, the Bank of England, and many major analysts now pushing back expectations to much later in 2016 and beyond.”

    “The Pound dropped sharply against the Euro and US Dollar, unwinding the last few sessions' strength in a matter of hours. The Federal Reserve are still talking rate hikes in December (with a lot of similarities between US and UK performance this is part of the reason the BOE surprised markets with their stance yesterday), so the Pound looks vulnerable against the greenback in the near future.”
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