As a currency trader you should be well versed in doing fundamental analysis. This includes keeping an eye on what the Central Banks are going. If you trade GBP/USD then you need to keep a constant watch over what the Bank of England Governor is doing. Just a few weeks back an off the cuff statement made by Mark Carney, the Governor of Bank of England sent GBP/USD 200 pips higher. Mark Carney is celebrating his first year as the Governor Bank of England (BOE). He has been called everything from a “rockstar” to an “unreliable boyfriend”. But he also became famous for flipflopping. Did you read the post GBPUSD jumped up 200 pips on Bank of England Governor speech? This shows how much power Bank of England Governor has over the British Pound.
UK growth and employment figures are better than expected. But some of this success can be attributed to his predecessor. His swift action to deflate the housing market bubble in London worked well. What this means is that the Bank has got more tools now to deal with the possible consequences. He has also changed the composition of the Monetary Policy Committee (MPC). The furore around Carney’s Mansion House speech, where he appeared to signal that interest rates would rise earlier than the market thought, sent sterling soaring above $1.70 and rattled the markets. It later turned out he could have waited for the same thing to be expressed, less alarmingly, as part of MPC minutes released days later.
I am updating this post in 2017. Britain has finally decided to go ahead with Brexit. Over the weekend UK PM Theresa May made a statement that Brexit will be painful to the UK economy. Mark Carney is still the Bank of England Governor. Things will get a bit challenging for him. Carney wants clarity over the Brexit proceedings after the UK PM muddled approach. Bank of England Governor and UK PM now seems to be on a collision course. Carney announced that he will stay in the job until 2019. How Britain deals with Brexit will have long term repercussion for UK economy. Bank of England Governor will play a key role in the Brexit plans now that the people have voted for it. Did you read the post EURO will weaken considerably? Bank of England Governor decision to stay in the job till 2019 will bring stability to the UK economy as the Brexit negotiations continue.