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British Pound Falls on the BoE’s Newest Member’s Dovish Speech

June 26, 2018 at 12:55 by Simon Mugo

A column of 50 British pound notesThe Sterling pound today fell to new lows against the US dollar following a dovish speech by the Bank of England‘s newest member Jonathan Haskel at his appointment hearing before the UK Parliament. Haskel’s comments coupled with renewed US dollar demand served to trigger the selling of the pound given that Haskel is replacing a hawkish BoE member.

The GBP/USD currency pair today declined from a high of 1.3292 to a low of 1.3207, but later retraced some of its losses.

The currency pair was in a consolidative range during the Asian session, but broke down after Haskel’s dovish comments. Johnathan Haskel stated that the UK has been experiencing “very retarded” investment, which has resulted in low productivity growth, and has made interest rates less effective in stimulating business investment. Haskel is replacing Ian McCafferty who is regarded as a hawkish member of the BoE’s Monetary Policy Committee given that he recently voted for a rate hike. Investors interpreted Haskel’s speech as dovish, which is what triggered the Sterling pound’s sell-off.

The release of the positive UK BBA loans for home purchase data had a muted impact on the currency pair. Haskel also commented that there many be a lull in the UK economy depending on the Brexit negotiations.

The currency pair’s short-term performance is likely to be affected by the release of Conference Board’s US consumer confidence index scheduled for later today.

The GBP/USD currency pair was trading at 1.3249 as at 12:47 GMT having dropped from an initial high of 1.3292. The GBP/JPY currency pair was trading at 145.27 having fallen from a high of 145.69.

If you have any questions, comments, or opinions regarding the Great Britain Pound, feel free to post them using the commentary form below.

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