BOE governor Mark Carney comments in his speech in Newcastle
- Not due to economic climate
- Domestic inflationary pressures are gradually building to rates consistent with target
- Headline inflation still expected to rise in short-term because of energy prices
- Domestic cost growth have continued to firm broadly as expected
- There are some tentative signs that more hostile and uncertain global trading environment has been dampening activity
- International data have been mixed since May meeting
- Tighter monetary policy will be needed
The two key lines in there is that he is brushing off Q1's softness yet again and continues to talk up inflation, and also saying that tighter policy is needed. That will give sterling bulls something to chew on ahead of more UK data to come in the middle of this month, but ultimately this shouldn't change things all too much.
There isn't any firm clues that an August rate hike is coming, as the brushing off of the Q1 soft patch is not something new and calling for tighter policy is what hawks like McCafferty has been advocating for quite a while and it's already the stance the BOE is leaning towards.
At the end of the day, the inflation, wages, and retail sales data due on 17 to 19 July will offer more clues as to whether or not we will see the BOE be able to hike in August.
GBP/USD rises to a high of 1.3267 on the back of the comments here before falling off now to 1.3250.
