Sterling surges, FTSE falls on Carney rate hike signal

Reuters

Bank of England Gov. Mark Carney said Wednesday the case for raising interest rates in the United Kingdom may strengthen in the coming months if the economy keeps motoring despite weak consumer spending, lifting the pound more than 1% against the dollar.

The Bank of England Governor Mark Carney said he'll maintain the status of polluting industries in the central bank's bond buying program even though he's anxious investors aren't doing enough to assess the risks of climate change.

He said the strengthening global economy and the United Kingdom competitiveness following the fall in sterling is creating the "possibility of a self-reinforcing revival in investment".

Haldane's comments raised speculation that the Bank is coming close to reversing the emergency quarter-point cut in official borrowing costs made in August 2016 when the MPC was seeking to shore up confidence in the wake of the Brexit vote.

Andy Haldane, the Bank's chief economist, surprised markets last week by signalling that he was poised to vote for a rate hike in the second half of the year if growth remains stable.

In a highly technical discussion, Carney says that the Bank would remove accommodation - another way of saying raise interest rates - if business investment held up and consumption did not fall as much as is feared.

'If the markets do start to feel that a rate rise is going to happen, don't expect the record-low mortgage rates now available to hang around.

Chelsea 'confident of signing Romelu Lukaku and Tiemoue Bakayoko'
Diego Costa is reportedly prepared to spend six months on the sidelines at Chelsea in order to join Atletico Madrid in January. Dani Alves has told Juventus he wants to leave amid interest from Manchester City .

EPAConsumer credit: What is the Bank of England Governor Mark Carney telling banks to do? The analysts believe "the market may be jumping the gun in the case of the Bank of England" as investors seemed to ignore that any rate increase is conditional on the trade-off between lower activity and higher inflation continuing to lessen. The BOE also proposed boosting the leverage ratio to 3.25 per cent of exposures excluding central-bank reserves.

"They have been wrong for eight years about this and now they are going to be right?" This all changed this afternoon however when quite unexpectedly BoE Governor Mark Carney called for tighter monetary policy.

The R2 monthly pivot stands as an obstacle to further upside at 1.3026 and the pair is likely to see significant selling at that level, which could lead to the up-move stalling, reversing or correcting.

Sterling also rose by nearly a cent against the dollar, hitting a five-week high of $1.2936 to the pound.

Support is at the previous high of 1.2820.

If other BoE officials speak in favour of higher United Kingdom interest rates then the Pound could appreciate, but for now, the "will-they won't-they" outlook on the BoE MPC remains as unclear as ever.

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