Following the Bank of England (BoE) inflation report this morning GBP/USD exchange rates climbed to their highest level since the 1st January. The pound got a real boost during Mark Carneys press conference which allowed Sterling to climb across the board, pushing GBP/USD exchange rates to a high of $1.5388, a rise of over 1% for the day.
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What did Mr Carney say?
Despite Governor Carney saying inflation in the UK could turn negative over the next few months the underlying tone of his speech was pretty upbeat. Mr Carney indicated inflation could turn negative because of falling oil and energy prices but expects prices to rebound by the end of the year, which would not mean the economy had entered deflation.
Mr Carney added that inflation figures were currently obscuring the economic recovery and that wage growth in the UK was on the way up.
The central bank revised up their growth forecasts for the next two years and were hopeful inflation in the UK would return to 2% sometime in 2017. If this is the case it should allow the BoE to start raising interest rates in 2016, great news for investors and is the reason we have seen the pound rise against the majors during today's session.
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