The Pound is alive and kicking, although monetary officials are not satisfied with its appreciation. Yesterday, the Bank of England governor tripped up Cable by saying that monetary policy may have to “move in order to stand still” due to possibility that global equilibrium interest rates are rising.
Despite the possibility of rate hike is looming somewhere in the future the markets obviously didn’t like the idea that monetary tightening might be just a compulsory measure.
Also, the question about Brexit’s impact on inflation “concerns the extent to which this adjustment has been brought forward”. The comments shaded the scope started after the BOE meeting when GBP/USD jumped two figures higher.
Carney sent Cable towards 1.3464 low which may become a strong support for now – today pair tried to break it through but haven’t succeeded yet. For now, the market is trying to understand whether it’s time to take profit and sit on the fence, or this is favorable environment for entering the long-term bullish trend. Personally I think there is much in store for Cable, and the current levels look very attractive for bulls with the nearest target at 1.3560.