(Bloomberg) -- The pound snapped a two-day rally as some investors took profit following the currency's best week since 2009.
The currency fell against most Group-of-10 currencies as Bank of England Governor Mark Carney said in Washington that global factors, which justify tightening soon, mean “monetary policy has to move in order to stand still.” He said any rate hikes would be limited, gradual and that the global equilibrium real rate may be rising. U.K. government bonds halted a six-day decline ahead of U.K. retail sales data due on Wednesday.
“Is Carney already beginning the great rate expectations row back?” said Jeremy Stretch, head of Group-of-10 currency strategy at Canadian Imperial Bank of Commerce in London. “Ahead of key data such as retail sales, the comments may leave some a little wary of immediately jumping upon the November BOE hike bandwagon.”
Sterling fell 0.5 percent to $1.3520 as of 4:37 p.m. in London, after touching $1.3619, the highest since June 24, 2016. It weakened for the first time in seven days versus the euro, dropping 0.6 percent to 88.40 pence. The yield on benchmark 10-year gilts was little changed at 1.31 percent, after climbing 32 basis points last week.
The market pricing sees a 73 percent chance of a rate increase in November this year, with an increase in interest rates by March now fully priced in.
To contact the reporters on this story: Charlotte Ryan in London at cryan147@bloomberg.net, Anooja Debnath in London at adebnath@bloomberg.net.
To contact the editors responsible for this story: Ven Ram at vram1@bloomberg.net, Keith Jenkins, Scott Hamilton
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