The soggy pound is on the back foot again in early trading 1 July
Carney's cut/easing comments are still reverberating but given the fact that he and others on the MPC have highlighted the downside risk/ potential need for potential cuts/easing over the past year, albeit saying next moves were expected to be up, I find it strange that some out there are surprised.
Yes it may be early days to see the impact of Brexit on the UK economy, and the weaker pound will bring some positives, but it's unlikely that things are going to improve any time soon. It's clear the BOE were over optimistic and were quietly hoping that things might improve but show me a central bank that hasn't been doing that for a while now.
Long-term readers here will know I've always been sceptical about interest rate hikes and the timing of them, especially in the UK economy, given my glass half-empty analysis post 2008 crisis. That fundamental belief has been at the core of my bearish UK/GBP view that hopefully has made a few of you some money over the past months/years.
So let's not shoot Carney or the BOE down in flames. They can't be blamed entirely for the mess that the UK finds itself in. A perfect storm is brewing globally and has been for a while the net result of which will see central banks rapidly running out of effective tools to do battle. Cheap money/negative interest rates have failed/are failing to stop the rot.
Equity markets rallying on the cheap money flows are understandable to a degree but short-sighted imho.
In the meantime the pound will continue to be under the cosh but other currencies are not out of the woods by any stretch of the imagination and will share the spotlight in their own time or when markets refocus their attention.
GBPUSD now down to 1.3283 from 1.3320 when I sat down 2 hours ago with EURGBP 0.8338 and continuing to be underpinned in the dips. I still see two-way business for GBP pairs but have no reason to change my bearish view and strategy to sell into GBP rallies.
