The Bank of England sent the pound lower with its “comprehensive, coherent and timely†package last week and the rout is not over. The current bout of carnage does not come from Carney but rather from his colleague Ian McCafferty.
GBP/USD slipped under 1.30 and reached a low of 1.2977. It does not really recover from those lows.
The central banker penned an op-ed in the Times, McCafferty opened the door for more monetary stimulus. The interest rate could be cut closer to 0% and more QE can be added. On the other hand, he does call for a gradual approach as data is still coming in.
McCafferty has been one of the members voting for a rate hike in the not-so-distant past. His shift to the dovish side shows how strong the impact of Brexit is. However, the most recent figure is not that bad: The BRC’s retail sales monitor shows a rise of 1.1%, much better than a slide expected. So not all is lost. Next week we’ll get some hard data: retail sales, CPI and jobless claims for July from the UK.
More: ‘Tough Times’ Ahead For GBP; How Low Can It Go? – BofA Merrill
Further support awaits only at the “Leadsom Line†at 1.2850, where the pound began its rally. Below, we have the 31 year low of 1.2790. On the topside, we still need a confirmation of the move under 1.30. Further resistance awaits at 1.3060.
Here is how it looks on the chart:
