Share

Pound weakens as investors take profit ahead of Carney speech

London - The pound fell for the first time in three days as investors took profits following the currency’s best week versus the dollar since 2009, which saw it surge on heightened expectations of an interest-rate hike by the Bank of England (BoE).

Sterling retraced some of its recent gains, having climbed earlier to the highest level since the day after the Brexit vote.

The currency jumped almost 3% at the end of last week after the Bank of England signaled on September 14 that it could withdraw stimulus “over the coming months.” In the options market, the cost of calls on the pound relative to puts held at the highest since 2009. UK government bonds halted a six-day decline.

BoE Governor Mark Carney is scheduled to give a speech in Washington at 4pm London time. With the increasingly hawkish stance indicated in the minutes of the latest BOE meeting, the market will be watching for any further indication of the central bank’s thinking and the timing of a rate hike.

“There may some scope for profit-taking in view of the scale of the two-day run,” said  Jeremy Stretch, head of Group-of-10 currency strategy at Canadian Imperial Bank of Commerce in London. “However, Carney could well put a floor under the pound later in Washington.”

Sterling fell 0.2% to $1.3563 as of 11:17, after rising to $1.3619, the highest since June 24, 2016. It weakened for the first time in seven days versus the euro, dropping 0.2% to 88.05 pence.

The yield on benchmark 10-year gilts was little changed at 1.30%, after climbing 32 basis points last week.

“Following the impressive sterling rally, any dovish comment by Carney is likely to weaken sterling more than hawkish comments would be able to support it at these current levels,” Commerzbank analyst Ulrich Leuchtmann wrote in a note.

SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.

Read Fin24's top stories trending on Twitter:

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
19.02
-0.6%
Rand - Pound
24.00
-0.4%
Rand - Euro
20.53
-0.3%
Rand - Aus dollar
12.35
-0.0%
Rand - Yen
0.13
-0.6%
Platinum
901.20
+0.5%
Palladium
997.97
-0.4%
Gold
2,210.69
+0.7%
Silver
24.71
+0.3%
Brent Crude
86.09
-0.2%
Top 40
68,075
+0.6%
All Share
74,269
+0.5%
Resource 10
56,834
+2.1%
Industrial 25
103,553
+0.3%
Financial 15
16,490
-0.2%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders