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Carney Walks Back Hawkish Tone Setting Up ST GBP/USD Selling

Carney Walks Back Hawkish Tone Setting Up ST GBP/USD Selling

Christopher Vecchio, CFA, Senior Strategist

Talking Points:

- BoE Governor Mark Carney walks back hawkish tone.

- Counter-trend trades in GBP, not looking for a top (yet).

- See the DailyFX Economic Calendar for Tuesday, June 24, 2014.

Bank of England Governor Mark Carney apparently took punishment for his hawkish commentary on June 12 in his Mansion House speech, as his comments today were nothing short of an effort to redact some of his hawkish tone. The British Pound, which had rallied on the prospect of interest rate hikes coming sooner than later, has suffered modestly as a result.

The key notes made by Governor Carney today are: the hawkish views are his personally and not that of the MPC; and that he said interest rates "could" rise sooner than anticipated, not that they "would."

The commentary made by Governor Carney doesn't necessarily set up a long-term GBP selling opportunity; the GBP is one of the top performers this year and has hit fresh yearly highs against several of its major counterparts (CHF, EUR, USD) in recent weeks.

Instead, these short-term selling bursts could provide better levels to engage the GBP-crosses at to the long side. The retail crowd has been on the wrong side of GBPUSD since July 2013 (short), so we're not inclined to fade the strength seen just yet from a sentiment standpoint either.

Read more: EUR/USD Fades under ECB Range Low, EUR/JPY Rejected at Resistance

--- Written by Christopher Vecchio, Currency Analyst

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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