Carney - rates likely to rise over the next year

Carney - rates likely to rise over the next year

Sterling on Friday headed for its fourth successive weekly decline versus the dollar, in what would be a first for the currency since 2015, after the Bank of England held rates and cut its economic growth projections. The MPC did underline that there were exceptional circumstances presented by Brexit, which is set to occur next March within the forecast horizon that the MPC considers.

Speaking to reporters this morning, Carney asked, "What's the sensible thing to do?"

Act before you need to.

Sterling fell on the news and was trading lower by 0.2% against the United States dollar at 1.352. Financial markets price in a roughly 65 percent chance of a rate rise by then, according to interest rate futures.

Carney later told BBC television that interest rates were likely to rise by the end of this year. But growth was weakest in Britain, where - less than a year before it is due to leave the European Union - Brexit-related pressures have squeezed consumer spending power and hurt firms' willingness to sign off on major investments.

"Despite a run of soft data, the economy may turn out to be more robust than recent evidence, and the Bank's newly lowered forecasts, suggest", he said.

Minutes of the meeting showed that most MPC members now wanted to wait to see "how the data unfolded" over the coming months. Mark Carney, the Bank's Governor, had to suffer the return of his old nickname: the "unreliable boyfriend".

Now investors want to see if Carney keeps market bets on an August hike alive at a news conference after the 1100 GMT rate announcement, or if he decides that sitting on the fence is a safer strategy.

However, JP Morgan economist Allan Monks said the BoE had sent a "muddled message" about its intentions. Inflation has been falling a little faster than the Bank expected it to, and it is now expected to drop down to the target 2% within the next couple of years, regardless of any change in interest rates.

"We fully expect the current scepticism of the BoE's guidance to ebb away, which will provide increased support for the pound as we advance toward the next key policy meeting on 2nd August", said Lee Hardman, FX strategist at MUFG.

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