FxWirePro: Dovish Carney pushes pound lower

The British pound is taking a hit this morning as the Governor of Bank of England (BoE) pushes back against the doves at the Monetary Policy Committee (MPC). Earlier this month, the market was surprised as three of the MPC members called for a hike of 25 basis points as the inflation in the UK runs higher than the central bank’s objective of 2 percent. In May, inflation reached 2.9 percent. In a prepared Mansion House speech, Mr. Carney said, “From my perspective, given the mixed signals on consumer spending and business investment, and given the still subdued domestic inflationary pressures, in particular anemic wage growth, now is not yet the time to begin that adjustment. In the coming months, I would like to see the extent to which weaker consumption growth is offset by other components of demand, whether wages begin to firm, and more generally, how the economy reacts to the prospect of tighter financial conditions and the reality of Brexit negotiations.”

As the Governor of the Bank of England (BoE) takes up the sides of the Doves, the market has pushed the pound lower. The pound is currently trading at 1.267 against the dollar, which is the lowest reading since the BoE monetary policy earlier this month. The pound has been declining sharply after the UK snap election resulted in a minority Conservative government and that decline got halted by three hawkish dissenters at the BoE policy meeting. With the dovish remarks from Carney, the pound may resume that decline again.