The pound is falling this morning after the Bank of England’s Mark Carney expressed concerns about future investment in the country. Earlier, the bank raised rates, spiking the pound. Meanwhile the dollar is gaining strength off of the Federal Reserve’s monetary policy statement Wednesday. And trade once again topples markets in Asia.
Pound plummets on Carney presser
The GBP/USD pair initially jumped when the BoE unanimously voted to raise interest rates to 0.75% Thursday morning, climbing from around 1.308 to above 1.31. However, concerns about the strength of the U.K. economy and whether it is strong enough to withstand a rate hike had the currency slipping.
The BoE was upbeat on the economy but stuck with its message of “gradual and limited” rate hikes, limiting market expectations of future hikes.
Bank Governor Mark Carney held a press conference after the statement was released, saying that monetary policy needs to walk, not run. Carney also expressed concern about investment in the economy given the uncertainty around Brexit.
GBP/USD fell from 1.311 to 1.301 after the press conference.
Dollar boosted by Fed
The dollar gained across the board Thursday morning from the lasting effects of the Federal Reserve’s hawkish monetary statement Wednesday.
The Fed said it sees the economy rising at a strong rate and that unemployment has stayed low. The strong outlook means that we will likely see another interest rate hike in September, and probably December, too.
EUR/USD is down around 1.161 after starting the day closer to 1.166. The pair was as high as 1.174 on Tuesday.
Trade worries continue
A new wave of trade-war fears caused markets in Asia to plummet overnight and the dollar to gain some traction.
The White House confirmed that President Trump asked U.S. Trade Representative Robert Lighthizer to increase the tariffs against China from 10% to 25%. The change could take place as early as next month.
The trade uncertainty, along with rising U.S. Treasury yields, has the dollar climbing.
Jobs, jobs, jobs
The week will end with the U.S. labor report on Friday, but before we get to that we have the weekly unemployment claims beating expectations Thursday.
The amount of initial unemployment filings for the week ending July 27 was 218,000, compared to an estimated 220,000.
Continuing jobless claims were also better than the expected 1.75 million at 1.724 million for the week ending July 20.
Friday’s nonfarm payrolls, or new job creation for the month, is expected to decelerate in July.