Bank of England Governor Mark Carney feels that no more bond-buying is necessary considering the current rate of economic recovery reflected by the UK economy of late. The sterling has bounced positively on the news, particularly as the Governor is usually considered as a dove and these comments seem to go against this train of thought. Coupled with the uncertainty in the States over the Fed’s tapering plans, this has allowed the sterling to test recent highs and left UK investors in a positive mood ahead of the weekend. Elsewhere, question marks remain in the States over negotiations to increase the debt ceiling limit; a level which is on the verge of being breached. This is further hampering the greenback’s current position against its major rivals and is a subject which may receive increased attention the longer negotiations are avoided.

Sterling

The sterling received a timely boost after Mark Carney was quoted in a local newspaper as having said that he has never supported an increase in quantitative easing since his arrival as the head of the Bank of England. The comments go against his usual dovish stance and surprised local investors, triggering significant buy up of the UK currency as a result. Coupled with some positive house price data released by Nationwide, this leaves the pound on the front foot.

US dollar

Concerns over the lack of progress over negotiations to increase the US Government’s debt ceiling are piling the pressure on the US currency. Traders are likely to keep a close eye on this story the longer the indecision continues and leaves the greenback in an uncertain position against its major rivals.

Euro

European Central Bank president Mario Draghi is expected to discuss the wellbeing of the eurozone while Italian 10-year bonds go on sale and after the rise of 5.8 basis points – still underperforming neighbouring debt – take up is not expected to be overly positive. Dovish comments from the leader of the European Central Bank, coupled with poor interest in Italian debt, could see the euro lose further ground against the British pound and give up some of its advances on the US dollar.

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