Sterling Pound Crashes on Dovish Carney Speech After BoE Rate Hike

The Sterling pound today crashed to new lows during a speech by Bank of England Governor Mark Carney regarding the bank’s interest rate decision. The GBP/USD currency pair had traded in a consolidative phase following the release of UK construction industry data before the BoE rate decision.

The GBP/USD currency pair today crashed from an intra-day high of 1.3126 to a low of 1.3034 in the early American session.

The currency pair was on a downward trend from the start of today’s session, but begun trading sideways following the release of the Markit/CIPS UK Construction PMI in the early London session. The PMI data came in at 55.8, which was way higher than the expected 52.8, indicating that activity in the UK’s construction industry was booming in July. The Sterling rallied briefly following the interest rate hike affected by the BoE’s Monetary Policy Committee at their latest meeting. The interest rate decision announced via the monetary policy statement raised the bank rate to 0.75% from 0.50%, while the asset purchase program was maintained at £435 billion. The BoE also released its August inflation report, which had a muted impact on the pair.

The pair’s rally was short-lived as the pound crashed following Mark Carney’s dovish comments after the rate hike. The release of the upbeat US initial jobless claims data by the Department of Labor had minimal impact on the pair.

The currency pair’s future performance is likely to be affected by tomorrow’s UK services PMI and the US non-farm payrolls data.

The GBP/USD currency pair was trading at 1.3057 as at 13:31 GMT having dropped from a high of 1.3126. The GBP/JPY currency pair was trading at 145.42 having declined from a high of 146.59.

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