GBP/USD: Dollar Rises with Relief Rally while Carney Sinks Sterling

The British pound slipped against the dollar on Thursday after Bank of England Governor Mark Carney took markets by surprise by voicing a more negative view on the UK economy. The dollar rose alongside equities as commodities fell in a massive relief rally after US President Trump de-escalated tensions with Iran.

GBP/USD was lower by 62 pips (-0.48%) to 1.3038 as of 1pm GMT, taking the currency pair to fresh lows for the week.

The dollar

In a press conference yesterday morning in Washington, President Trump said it appeared Iran was “standing down” after its missile attack on a US base in Iraq. The US opted to de-escalate tensions by imposing more economic tariffs on Iran rather than military action. The aversion of a new war in the Middle East was welcomed across markets with US stocks hitting record highs. The dollar lost out against riskier currencies but gained against the pound and the Japanese yen, which is typically less in demand when investors are more willing to take risk.

The pound

The British pound was one of worst-performing currencies on Thursday, especially considering the positive mood brought about by falling geopolitical tensions in the Middle East. The Sterling weakness was almost entirely in response to the dovish comments made by the outgoing Bank of England governor during a speech at a conference in London. Whist many economic commentators had turned more optimistic on the UK economy after last month’s decisive election result, Carney took today’s speech as an opportunity to highlight the risks.

Governor Carney’s specific concern relates to the lack of space for the central bank to cut interest rates in case the economy does not improve this year. Interest rates have been kept near record lows through Carney’s six-and-a-half-year tenure as BOE Governor. As a result Carney indicated policymakers in the Monetary Policy committee were debating the “relative merits of near-term stimulus” in order to help the expected economic recovery along. He went  on to say that stimulus might include interest rate cuts or more quantitative easing (QE), both of which debase the value of the pound. is a news site only and not a currency trading platform. is a site operated by TransferWise Inc. (“We”, “Us”), a Delaware Corporation. We do not guarantee that the website will operate in an uninterrupted or error-free manner or is free of viruses or other harmful components. The content on our site is provided for general information only and is not intended as an exhaustive treatment of its subject. We expressly disclaim any contractual or fiduciary relationship with you on the basis of the content of our site, any you may not rely thereon for any purpose. You should consult with qualified professionals or specialists before taking, or refraining from, any action on the basis of the content on our site. Although we make reasonable efforts to update the information on our site, we make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up to date, and DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Some of the content posted on this site has been commissioned by Us, but is the work of independent contractors. These contractors are not employees, workers, agents or partners of TransferWise and they do not hold themselves out as one. The information and content posted by these independent contractors have not been verified or approved by Us. The views expressed by these independent contractors on do not represent our views.