GBP Gets Sold Off On Rumors of Dovish Carney

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GBP Gets Sold Off On Rumors of Dovish Carney
GBP Gets Sold Off On Rumors of Dovish Carney

GBP Gets Sold Off On Rumors of Dovish Carney

The British pound exhibited a lot of volatility on the charts last Friday. GBP/USD rallied to a high of 1.7117 and quickly dropped to its lowest level for the week at 1.7035 during the London session. By the end of trading in New York, the pair was back up at 1.7084, only 7 pips below its opening price. There were no reports released from the United Kingdom on Friday. However, there were rumors of BOE Governor Mark Carney had dovish remarks for the currency which consequently led traders to sell the pound. The central bank quickly denied these claims by saying that Carney did not have any scheduled interviews for the weekend. The pound was also able to pare its losses as market sentiment improved on Friday, following reports of the Malaysian Airlines Flight 17 crash on Thursday.

Reports suggest that the commercial plane which had almost 300 civilians was shot down by Russian-backed separatists. Initially, the crash sparked risk aversion in the markets as it highlights the ongoing geopolitical crisis happening between Russia and Ukraine.

Investors fled to safe haven assets and sold higher-yielding currencies like the pound because of the risks posed by the conflict. A few reports are due to be released from the United Kingdom in the next few days which could dictate the currency’s price action.

Tomorrow, public net sector borrowing and the CBI industrial trends reports will be on tap at 8:30 am and 10:00 am, respectively. Then on Wednesday, the Bank of England (BOE) Monetary Policy Committee (MPC) will announce its interest rate decision. While it is widely expected that the central bank would not make any changes to interest rates, the statement could provide a deeper insight on its future monetary policy decisions. On Thursday, data on consumer spending will be released which would reflect the value of retail sales for June.

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.