Bank of England Governor Mark Carney drove GBP/USD higher when he told the market that interest rate increase could happen sooner than expected. But when he was criticized by the lawmakers on his statement, he toned down his interest rate increase rhetoric. Bloomberg reported that Mark Carney toned down his rhetoric on the timing of a Bank of England interest-rate increase as lawmakers criticized him for a lack of clarity on the outlook for policy. And GBP/USD fell on his comments.
It marked a change in tone from comments made earlier this month, when Carney said interest rates could rise sooner than expected . Government bond yields shot up and sterling rose to a near five-year high against the dollar as a result. Prior to this, most investors were not expecting a rate hike until 2015.
BOE Governor said that the interest rate hike will be data driven and will be gradual and limited. If you trade the British Pound GBP than you should keenly follow Bank of England policy decisions. Last week GBPUSD opened with a huge weekend gap of 200 pips down when Theresa May UK PM hinted at a hard Brexit over the weekend. Then during the week on Tuesday Theresa May UK PM in a speech to UK parliament said that her government will put her Brexit plan to vote at the parliament. This made GBP rally hard. So this is how political statements move the currency market up and down. You need to learn how to keep an eye on these political statements and how they affect the currency market. Is it time to short EURUSD?