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Sterling eyes $1.70
The pound is trading at $1.6982, up 0.3% after Mr Carney stated the Bank of England could increase interest rates sooner than traders expected.
The announcement pushed the pound higher versus the US dollar, but it didn’t have the momentum to reach $1.70. George Osborne has given the BoE the power to limit mortgage lending by UK banks, and Mr Carney will use this to rein in borrowing by homeowners.
In the short term I think the pound could trade above the $1.7 mark, but I suspect that Mr Carney was sending a message to the markets that interest rates will not stay at historic lows forever.
At 1.30pm, the US will reveal the latest PPI report and the consensus is for an increase of 0.1%. If the figure is stronger than expected we may see some profit-taking which could put the pound on a path towards £1.6850.