Just as Carney was dusting-off his feather quill pen to explain the recent hike in Inflation to Phillip Hammond, news broke that two further MPC members have dissented. Both Saunders and McCafferty have joined Kristin Forbes in opting for a rate hike, catching much of the square mile by surprise and pushing Sterling sharply higher.
A surging euro was hit by a reality check today as ECB President Mario Draghi took a surprisingly cautious tone in his post-meeting statement, choosing to overlook an improved growth picture and instead focus on lower inflation. The ECB will continue to pump EUR 60bln into asset purchases each month until December at least and will only make adjustments when the “path of inflation is consistent with its inflation aim”. For the moment though, Europe continues to require a “very significant amount of policy accommodation”.
With the recent YouGov poll showing a near even split, Alex Lydall, Head of Dealing at Foenix Partners says that prospect ‘does bring in the big [downside] risk’ for sterling. Alex suggests that at present GBP/USD is pricing in a Conservative majority.
Alex Lydall appears on IGTV