AFP, London :
The pound fell on Friday after Bank of England Governor Mark Carney shook the market’s confidence in an early interest rate hike, dealers said.
“Carney put an end to the debate, saying that markets should not bet on a May rate rise,” noted Jasper Lawler, head of research at London Capital Group.
Markets had been widely pricing in a quarter-point interest rate hike in May, to 0.75 percent, amid a pick-up in UK wage growth, but British economic data this week, including a sharp drop in retail sales, had started to dampen those expectations.
“Prepare for a few interest rate rises over the next few years,” Carney told the BBC. “I don’t want to get too focused on the precise timing, it is more about the general path.”
Higher interest rates typically boost a currency as holding it generates higher returns for investors.
“While Carney did not deviate from the view that gradual rate hikes are going to be necessary, he did cast doubt on whether the next will come in May, which was heavily being priced in earlier this week,” said OANDA analyst Craig Erlam.
The British currency came off its lows after Carney’s fellow BoE policymaker Michael Saunders hinted that he could vote for a hike in May. The London stock market’s FTSE 100 index gained, outperforming its European peers, as the pound’s weakness boosted share prices of multinationals listed in London which derive much of their earnings in dollars.
In company activity, Irish building materials group CRH topped the FTSE risers board, rising almost four percent on swirling speculation over a US listing and share buybacks, dealers said.
Among big losers, British consumer health giant Reckitt Benckiser saw its share price dive on a poor trading update.
The pound fell on Friday after Bank of England Governor Mark Carney shook the market’s confidence in an early interest rate hike, dealers said.
“Carney put an end to the debate, saying that markets should not bet on a May rate rise,” noted Jasper Lawler, head of research at London Capital Group.
Markets had been widely pricing in a quarter-point interest rate hike in May, to 0.75 percent, amid a pick-up in UK wage growth, but British economic data this week, including a sharp drop in retail sales, had started to dampen those expectations.
“Prepare for a few interest rate rises over the next few years,” Carney told the BBC. “I don’t want to get too focused on the precise timing, it is more about the general path.”
Higher interest rates typically boost a currency as holding it generates higher returns for investors.
“While Carney did not deviate from the view that gradual rate hikes are going to be necessary, he did cast doubt on whether the next will come in May, which was heavily being priced in earlier this week,” said OANDA analyst Craig Erlam.
The British currency came off its lows after Carney’s fellow BoE policymaker Michael Saunders hinted that he could vote for a hike in May. The London stock market’s FTSE 100 index gained, outperforming its European peers, as the pound’s weakness boosted share prices of multinationals listed in London which derive much of their earnings in dollars.
In company activity, Irish building materials group CRH topped the FTSE risers board, rising almost four percent on swirling speculation over a US listing and share buybacks, dealers said.
Among big losers, British consumer health giant Reckitt Benckiser saw its share price dive on a poor trading update.
