GBP/USD Falls 140 Pips As Bank Of England Governor Pledges Not To Increase Rates

Today GBP/USD fell more than 140 pips when the Bank of England Governor Carney pledged not to rush rate increase. Mark Carney pledged that Bank of England officials won’t rush to raise interest rates as he highlighted overseas risks to Britain’s recovery and the weakness of wages. Speaking after a mixed labor market report that showed the first drop in pay since 2009 and the lowest unemployment since 2008, the BOE governor said Britain’s expansion “faces some challenges.” He told reporters in London that policy makers are focusing on wages, and share a similar view to investors on the path of interest rates being “gradual and limited.”

BOE wants a weaker Pound. Pound dropped to 2 months low as traders lowered their expectations of a interest rate increase after BOE Governor Carney. “The market is busy pushing back its interest-rate hike expectations well into 2015,” said Neil Jones, head of hedge-fund sales at Mizuho Bank Ltd. in London. “That is the key why the pound is being sold across the board. There was some expectation and pre-announcement bullishness, however, given the downward revision in wage projections and the ‘gradual and limited’ words again, the market is selling the pound.”