Carney Boosts GBP To 9% Gain in 2014

Many factors affect currency values, including geopolitics, growth and other economic data, mergers and acquisitions, politics, and central bank reserves. But none is more important and powerful as interest rate differentials. And with those magic words, Carney has set the trade.
“It is likely that pound strength will prove more persistent now with the BoE highly likely to become the first major central bank to begin raising rates later this year,” wrote currency strategist Lee Hardman of Bank of Tokyo Mitsubishi

Put simply: “In the short run, U.K. data is better and Carney sounds more willing to raise rates early than (Federal Reserve Chair) Janet Yellen. There isn’t much point fighting the move,” said Kit Juckes of Societe Generale.
Before Carney’s speech, the market was pricing in a hike in interest rates from the Bank of England next May; after the speech, that moved up to January. And some are talking about as soon as this year.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza