25 Jun 2014
GBP remains strong in spite if Carney’s comments – Danske Bank
FXStreet (Edinburgh) - In the view of Pernille Nielsen, Analyst at Danske Bank, the sterling would keep its strength in the upcoming periods.
Key Quotes
“Sterling lost ground yesterday on comments from Bank of England Governor, Mark Carney, saying that wage growth has been lower than the central bank anticipated”.
“Low wage growth implies that there is scope to absorb more slack in the economy before rates will be increased and EUR/GBP rose and moved away from the sub 0.80 area as investors dampened expectations of an imminent rate hike”.
“However, the market still prices in the first rate hike before the end of this year and, while timing remains uncertain, we still expect the Bank of England to hike before the Fed and way before the ECB”.
“For that reason, we still have a fairly bullish view on GBP (we target EUR/GBP at 0.76 in 12M)”.
Key Quotes
“Sterling lost ground yesterday on comments from Bank of England Governor, Mark Carney, saying that wage growth has been lower than the central bank anticipated”.
“Low wage growth implies that there is scope to absorb more slack in the economy before rates will be increased and EUR/GBP rose and moved away from the sub 0.80 area as investors dampened expectations of an imminent rate hike”.
“However, the market still prices in the first rate hike before the end of this year and, while timing remains uncertain, we still expect the Bank of England to hike before the Fed and way before the ECB”.
“For that reason, we still have a fairly bullish view on GBP (we target EUR/GBP at 0.76 in 12M)”.