Fundamental Comment

Pound resumes fall as Carney raises doubts about May’s rate hike


The British pound dipped to the lowest level in 10 days versus the U.S. dollar, as the Bank of England Governor Mark Carney raised doubts about next month’s interest rate hike.

The GBPUSD pair slipped for a fourth straight session to a low of 1.4035, the lowest level since April 6, set for its first weekly decline in three weeks.

While many analysts had predicted a more than certain interest rate hike in May, BOE Carney said MPC members will make their decision “conscious that there are other meetings” at which they could vote to a rate increase.

Carney hinted that the latest weak data would make policymakers look at the economy “in the round.”

Data released this week showed that inflation dropped more than forecast in the year ended March, while retail sales signaled a more than estimated fall last month.

Investors will put the first GDP reading for the first quarter, due on April 27, under scrutiny to get clues about the timing of the first rate hike this year.

Carney also highlighted the uncertainty surrounding the Brexit negotiations with the EU, making a rate hike on May 10 policy meeting less likely.

His dovish remarks lowered interest rate hike odds next month from 80 percent to less than 50 percent.

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