GBP/USD at 1.63 After Strong Fall Last Week

The pound had the biggest weekly decline against the dollar in six weeks after Bank of England officials sought to damp speculation that they will raise interest rates sooner than they have previously indicated.

Sterling retreated from a two-year high against its U.S. counterpart and reached the weakest level in a month against the euro. Policy will be tightened “only when we are well along the road to recovery,” Bank of England Chief Economist Spencer Dale said yesterday. U.K. government bonds were little changed. Governor Mark Carney in August began offering forward guidance on the future path of interest rates.

“The market has moved over the last week to pare back expectations of the tightening in the U.K.,” said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “Ultimately the Bank of England are trying to reinforce their forward guidance message that rates are likely to remain lower for some time even though the recovery is robust.”


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