Carney’s Speech Will Make Or Break GBP Tomorrow

Posted Monday, June 19, 2017 by
Skerdian Meta • 2 min read

Tomorrow the economic calendar appears relatively empty apart from a few mild data points. However, there are quite a few central bankers scheduled to speak so I expect some volatility due to them.  

FED member Fischer starts the marathon tonight, followed by the RBA (Royal Bank of Australia), which is expected to release the minutes from their last meeting.

SNB (Swiss National Bank) Chairman Jordan is making two appearances tomorrow. It´s likely that his comments will induce some volatility in CHF pairs.

Market attention though is on BOE (Bank of England) chairman Mark Carney. On Thursday last week, two BOE members joined votes with Forbes to hike interest rates. That makes it 3 out of 8 voters in favor of increasing the rates.  

As I mentioned in the weekly analysis, no one expects the BOE to hike rates soon, but the forex market was surprised by the BOE votes.

GBP/USD jumped around 100 pips after the BOE statement on Thursday and has remained there ever since, apart from the 50 pip drop today which was due to USD strength. That sort of price action means that the market is waiting for Carney´s speech since he didn´t hold the normal press conference after the meeting on Thursday.   

Basically, this is as straightforward as it gets in forex – if he´s hawkish the market will think he´s supporting the rate hike group. If his comments are dovish, then everyone will dismiss the 3 hawkish votes and that will be the start of another downward move for the GBP.

It´s likely there will be whipsaws until the market completely processes Carney´s comments. Even after that, it will be hard to get in this trade, but we will be here trying to get our foot in. By the way, I´m for the downside.   

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