Monday saw the first ‘down day’ for GBP/USD for the first time in 11 trading days, and at one stage early in the European morning on Tuesday, the pair dipped below 1.40 for the first time in a week. On a day which saw some large intra-day swings in both directions for all the major currencies, the GBP was the most volatile of all. GBP/USD fell 85 pips then rose 175 to be back where it opened on Monday morning in Asia around 1.4150.
Bank of England Governor Mark Carney appeared Tuesday afternoon before the House of Lords Select Committee on the economy. He refused to comment on the confidential government analysis of the economic impact of Brexit which was reported to have been shown to Cabinet Ministers over the weekend. These had suggested growth would be between 2-8 percent lower over the next 15 years. Instead, he repeated his view that the 2016 Brexit vote had, so far, effectively knocked 1 per cent of GDP off the UK, relative to where it would otherwise have been, through weaker corporate investment and damage to household consumption due to higher inflation. He also hinted that the Bank is actually preparing to upgrade its forecasts at its Inflation Report next month. “I would expect that in 2019 we will see a pick-up in this economy all things being equal – strong global growth, greater certainty... A disorderly Brexit, not a likely scenario at all, is less likely than at the time we did the assessment in the fall.”
After Mr Carney’s remarks, a strong rebound in the GBP took it to the top of our one-day performance table; up against all the major currencies we follow closely here, not just the US Dollar.
With no top-tier UK economic statistics on Wednesday, the Pound opens in Asia this morning at USD1.4150, GBP/AUD1.7505 and GBP/NZD1.9290.