- Howard Archer, chief UK economist at IHS Economics
On Monday the cable was almost unchanged in quiet session and a lack of fundamental data from the U.K. Although, Yellen's last week's comments and hints about the upcoming rate hike can become a strong, long-term driver for the U.S. Dollar, and the cable in particular, this week the Sterling will remain in focus almost every data, as Mark Carney will take the stage on Thursday.
Even though policymakers are projected to stay pat on the monetary policy, a hike to 0.75% will result in a strong bullish spike. With this unlikely to happen, a strong trend change for the Sterling can be expected in the foreseeable future. The central bank has kept its benchmark interest rate at 0.5% since March 2009, while MPC members were unanimous in their decision. This sentiment is expected to be echoed again this week. While Carney made it clear, the central bank will not rush raising borrowing costs, the latest inflation report supports the case for a period of prolonged stimulus measures.
Carney has begun implementing reforms in the three-century-old institution since the appointment last year. He pledged to reform the banking sector as well as oversees changes to the management to avoid further scandals or issues wit the banking sector. At the same time, he should adjust his forward guidance, or, otherwise, he will fail in convincing investors once again.
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