Speaking to London's banking community alongside finance minister Philip Hammond a day after Brexit talks started, Carney cited weak wage growth, mixed signals on consumer spending and business investment as reasons for not moving to raise interest rates any time soon. Sterling sank from $1.2758 to a one-week low of $1.2669 after the text of Carney's postponed Mansion House speech was released. It also fell over half a percent to a five-day low of 88.02 pence per euro. “Market sentiment towards sterling had shifted towards a possible rate hike followiing a shock shift to 5-3 last week from the MPC (Bank of England monetary policy committee),” said Mizuho's head of hedge fund FX sales, Neil Jones. Short sterling interest rate futures also rose strongly, especially for the late 2018 and early 2019 contracts, as the market priced in a shallower path of interest rate hikes in future years.

Source: The Hindu June 20, 2017 07:52 UTC