- Posted by Shyam Gokani in Bank of England, Brexit, Currency, Dollar, Economy, EUR, Mark Carney, Prime Minister, Sterling, UK
- November 1, 2016
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Sterling hit an almost two-week high yesterday, with expectations of more upbeat news on the economy helping it build on gains after Bank of England Governor Mark Carney said late on Monday he would be staying on until 2019.
Criticism from some senior ruling Conservatives and right-leaning newspapers had prompted speculation over the past week that Carney might even leave before the end of his initial term, set to end in 2018.
That has added to nerves around Britain’s economic prospects as it heads into negotiations on how it will leave the European Union and Prime Minister Theresa May moved to back the governor on Monday as sterling weakened.
Carney didn’t need to give a decision until the end of the year but he came through early to get rid of some of the political uncertainty clouding the UK markets now.
Even after this announcement, Carney may still leave the Bank of England at a delicate time for the UK economy.
GBP (PMI) Manufacturing Data was released this morning. The reading came in slightly lower than expected at 54.3 instead of 54.5 as forecast. However, the markets did not react to this.
A poll of analysts on Monday suggested sterling would likely drop another 5 percent against the dollar soon after Britain starts its formal divorce proceedings from the European Union next year.
Since Britons voted on June 23 to leave the EU, the pound has dropped almost 20 percent against the dollar and 15% against the euro, declines that are not yet over, according to the poll of more than 60 foreign exchange strategists taken in the past few days.