GBP: Fading the Carney confusion - ING

Viraj Patel, Research Analyst at ING, attributes the pound’s circa 1% knee-jerk move lower to markets pushing back their expectations for additional BoE rate hikes, although the overall level of tightening priced in has returned back to where it had been on average over October.

Key Quotes

“The market-implied BoE policy rate in 3 years’ time is now at 1.00% - which we deem appropriate for now relative to BoE’s message this week.”

“The bigger driver for GBP tends to be the overall level of tightening priced – and this remains data, and more importantly, Brexit-dependent. On the Brexit front, negotiations are expected to resume - while the government may release its analysis on the Brexit 'No Deal' implications. Data wise, only industrial production and trade data to note (both Fri).”