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Sterling Continues Relief Rally

Posted by WorldWideMarkets . on Aug 8, 2013 3:41:00 AM
New BOE governor Mark Carney made a fairly dovish statement on Wednesday saying unemployment needs to drop to 7 percent before policy will change.  There was some volatility but ultimately the pound rallied while stocks took a hit. There has been much talk since about the three provisions that would cause the BOE to change its position being inflation, a change in medium term expectations or a threat to financial stability but the market moves since Carney were on what was not said. Carney is dovish but there was no mention of further stimulus which would have sent sterling lower and probably stocks higher. Instead the market went the other way on relief that while the BOE may make additional measures to stoke the economy in the future should it be warranted, there is nothing now on the table. The pound's trading gains on Wednesday gave it a 14-day exponential relative strength index print of 68.295, just under overbought. Gains also sent cable back through the 14-, 50- and 100-day simple moving averages. A good week for the UK and the pound. Score card for Carney so far is he's meeting expectations but only time will tell if he was the only or best choice. It's early days and it should not be forgotten that Mervyn King laid the groundwork for a lot of what is now happening in the UK economy. pound trading

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