New Model Adviser - For professional financial planners

Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration only takes a minute.

Pound slumps as Carney casts doubt on May hike

Pound continues decline as Bank of England governor Mark Carney suggests interest rate rise in May is not a foregone conclusion.

Pound slumps as Carney casts doubt on May hike

The pound has suffered a fresh fall after comments from Bank of England governor Mark Carney sowed some seeds of doubt on the prospects of an interest rate rise in May.

Sterling slumped on Carney's comments, in an interview with the BBC, falling from $1.424 against the dollar early yesterday afternoon to $1.408 by the evening. The pound has continued to slide this morning, hitting $1.405.

Carney said recent economic data had been 'mixed'. 'On the softer side some of the business surveys have come off,' he said.

'Retail sales have been a bit softer - we are all aware of the squeeze that is going on in the high street. We'll sit down calmly and look at it all in the round.

The renewed slump in sterling comes at the end of a week when the currency has come under selling pressure, 

The pound has fallen 2.2% against the dollar over the past four days, hit by a surprise fall in inflation, a bigger-than-expected fall in retail sales, and Carney's dovish comments.

Investors had already started to doubt the Bank would attempt a second interest rate rise this year in November, but until yesterday a first, in May, had been heavily priced in.

'Even though wage growth data, inflation and retail sales ll missed expectations across the week, the markets were still optimistic that the Bank of England could hike rates when they meet in May,' said Fiona Cincotta, senior market analyst at City Index.

'Carney poured cold water on market optimism for a Spring hike, suggesting that investors were not looking closely enough at the data, whilst reminding the wider market that the central bank could hike in other months through the year.'

The pound's fall provided fresh impetus to the FTSE 100, whose stocks rely on overseas markets for around three-quarters of their earnings.

The UK blue-chip index rose 24 points, or 0.3%, to 7,353. House builders were among the risers on the prospects of interest rates remaining lower for longer.

Barratt Developments (BDEV) rose 1.9% to 593.6p and Persimmon (PSN) added 1% to £27.28.

Reckitt Benckiser (RB) was the heaviest faller, down 6.5% at £54.13 as the consumer staples group reported 2% sales growth in the first quarter, below investors' expectations of 2.6%.

Shire (SHP) was another big faller, down 5.2% at £37.67 after the pharmaceutical group rejected a takeover offer from Japan's Takeda (4502.T) and Dublin-based rival Allergan (AGN.N) reversed course on pursuing a rival bid.

Allergan said yesterday it was considering a bid, before ruling out an offer last night.

Share this story

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
More Content
6970.59 + 2 0.03% 04:35
More Content
More Content


Conference capers: see the behind the scenes shots from our event

Conference capers: see the behind the scenes shots from our event

There are a few pictures left over from our conference and awards last week that we have not published. So why not? They are pretty fun.


7 Comments Firm boasts of swerving pension cold calling ban

Firm boasts of swerving pension cold calling ban

A firm that contacts businesses to arrange appointments with financial advisers has swerved a ban on cold calling people about pensions.