GBP/USD trims advance after Carney’s testimony

British pound trimmed its daily advance against the US dollar, following Bank of England (BoE) Governor Mark Carneys testimony before the Treasury Committee, where he said that an unemployment rate of 7% was a threshold for a rate hike.

GBP/USD reached a session high at 1.6194 at 8:50 GMT, after which consolidation followed at 1.6175, rising 0.11% for the day. Support was likely to be received at November 22nd low, 1.6180, while resistance was to be met at November 21st high, 1.6202.

At the testimony on Bank of Englands quarterly report on inflation before the Treasury Committee, Mark Carney said that economy in the United Kingdom was “picking up sharply”, while he also welcomed the recent growth in payrolls. He reiterated that an unemployment rate of 7% was a threshold and not a trigger for raising borrowing costs.

“We expect today’s Q&A to reiterate the Bank of England’s message that the economic recovery has broadened and deepened and that the chances of an early hike have increased as a result,” Valentin Marinov, head of European Group-of-10 currency strategy at Citigroup Inc. in London, wrote in a note to clients, cited by Bloomberg. “Renewed rate hike bets could add to the cyclical tailwinds” for the sterling.

BoE Governor also criticized the Office for National Statistics (ONS), because of the quality of some economic reports it publishes, including reports of utmost significance for central banks monetary policy course. According to Carney, some official reports have been implausible, as they have not come in consonance with a number of surveys on economys health.

The yield on UK benchmark 10-year gilts decreased two basis points, or 0.02 percentage point, to reach 2.75% today. UK gilts have fallen 3.1% this year through Monday.

Also, on Monday a report by the British Bankers’ Association (BBA) revealed that the number of newly approved mortgages in the UK came below expectations. The median estimate of analysts pointed a number of 45 200 newly approved mortgages, while the official data disappointed, as the number of mortgages reached 42 808 in October. A month ago the number of approved mortgages has been revised up to 43 182 from 42 990 previously.

Meanwhile, market players awaited the release of a string of economic data out of the United States, scheduled later on Tuesday. At 13:30 GMT a report on building permits for September and October is expected to be published. The Commerce Department will not publish the US housing starts data today, because of a gap in funding due to the 16-day partial government shutdown, experienced in October. This report will probably be released on December 18th.

At 14:00 GMT, S&P and Case-Shiller will publish data regarding home prices in 20 large cities in the United States. The annualized rate of increase in prices probably continued in September, with the corresponding index gaining 12.97%, after it rose 12.82% in August.

One hour later the Conference Board research group is scheduled to announce the results of its most recent survey on consumer confidence in the US. The gauge probably advanced to a reading of 72.1 in November from 71.2 a month ago. Better than anticipated results will certainly heighten the appeal of the greenback.

Elsewhere, the pound was lower against the euro, with EUR/GBP cross advancing 0.20% on a daily basis to trade at 0.8386 at 13:11 GMT. GBP/JPY pair was losing 0.27% to trade at 163.84 at 13:12 GMT.

TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover Forex, Price Action and Social Trading.

Related News