"The path of monetary policy, the path of interest rates is going to be calibrated very carefully to ensure that only when we see sustainable growth in jobs, in incomes and in spending, will we make adjustments"
- Mark Carney, BoE Governor
This week investors should definitely pay their attention to the Pound as every single day of the week a set of vital data or comments that can shed light of central bank's future moves will be available to public. According to Dukascopy currency index, the Sterling is sold in almost 62% of all cases across the board, meaning that traders expect Mark Carney to remain dovish, while inflation, unemployment and retail sales are projected to surprise markets to the downside. Therefore, the cable has a potential to ease back to important resistances at 1.6670 and 1.6621.
While it is still unclear how and when the central bank will adjust its monetary policy, Mark Carney's Sunday's interview can decrease the level of uncertainty. He pledged to start raising rates only when a range of measures will point the domestic economy is operating at closer to its full capacity. Earlier, the BoE has linked its forward guidance only to the unemployment rate, while now it seems they are focussing on a variety of measures, including growth in the number of jobs, wages and incomes. Carney also stressed out that the fact the cable is trading around 1.68 level means that markets have been pricing in a first rate hike in the second quarter of 2015, and according to the official estimates this is consistent with the key measure of inflation just below the target level of 2%.
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