GBP/USD shot up more than 200 pips on the Bank of England Governor Mark Carney’s speech that a rate cut could come much earlier than expected. GBP/USD touched the high of 1.69922 on Friday. It is very much possible that it breaches the 1.7000 level before it finds resistance and starts dropping again. The change in rhetoric from the central bank’s top officer caught markets by surprise. Carney had previously argued that there was enough labor-market slack to hold off on tightening monetary policy.
“There’s already great speculation about the exact timing of the first rate hike and this decision is becoming more balanced. It could happen sooner than markets currently expect,” Carney said Thursday in the annual Mansion House speech. He also said the size and pace of future interest-rate hikes are more important than the timing of the first hike.