British Pound Weakens Against US Dollar Despite Hawkish BoE

The British pound today weakened against the US dollar despite the hawkish comments made by the Bank of England Governor in his testimony before lawmakers. The pound declined against the US dollar despite the release of positive UK CPI data for September early in the European session.

The GBP/USD currency pair declined by over 110 points from its daily high of 1.3286 hit earlier in today’s session.

The weakness in the British pound was largely attributed to market fears of a hard Brexit following a deadlock in the negotiations last week. The release of a positive UK CPI print for September by the Office for National Statistics could not lift the GBP/USD currency pair higher. The headline CPI came in at 3.0% on an annualized basis in September, which was in line with expectations. The core CPI also met expectations as it was recorded at an annualized rate of 2.7%. These inflation figures were the highest such figures since April 2012.

Hawkish comments from the BoE Governor, Mark Carney also could not lift the depressed pound. Carney stated that a BoE rate hike might be appropriate in the near future in his testimony before the Treasury Select Committee. He also stated that the 2016 round of quantitative easing had a positive impact on the UK economy.

The release of the UK labour market figures tomorrow and the US housing starts data might affect the currency pair’s future performance.

The GBP/USD currency pair was trading at 1.3189 as at 13:22 GMT having dropped from a high of 1.3286 earlier today. The GBP/JPY currency pair was trading at 148.18 having declined from a daily high of 149.05.

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