Consumer borrowing powers on unexpectedly in May

Pound Sterling continues to gain on the US Dollar with levels at 1.30 being tested 24 hours after Bank of England Governor Mark Carney relaxed his "dovish" stance on the future of United Kingdom interest rates.

The currency's strength came after Carney said in remarks prepared for a conference in Sintra, Portugal that the central bank would be less tolerant of above-target inflation if the British economy improves.

He said the strengthening global economy and the United Kingdom competitiveness following the fall in sterling is creating the "possibility of a self-reinforcing revival in investment".

The meeting of BOE monetary policy committee which takes place in the month of June has the result of the 5-3 vote in the favor of holding interest rates at record low levels.

Consumers' non-mortgage borrowing showed "strong" growth in May, with a 10.3% annual increase, according to a Bank of England report.

However, since the last vote chief economist Andy Haldane has stunned markets by declaring he will probably vote for a rise later this year.

Mr Carney said it would depend on "how the economy reacts to both tighter financial conditions and the reality of Brexit negotiations". And I want to see how that plays out. So either those rates should rise, or asset prices should fall.

"(Carney's comments) have been quite supportive for the pound, particularly against the dollar which is trading around pre-election levels", said Alexandra Russell-Oliver, currency analyst with Caxton FX.

Blue Apron serves up lukewarm IPO
The New York company still expects to sell 30 million shares, raising as much as $330 million in its IPO under the new range. At $ 10 a share , believers in the stock suggested the IPO should value the company around $1.89 billion.

As expected, banks are from Tuesday increasing the United Kingdom countercyclical capital buffer rate from zero percent to 0.5 percent, or by #5.7 billion, the BoE's Financial Policy Committee watchdog said in a bi-annual report.

Sterling rose to $1.2936 against the dollar after Mark Carney said that "some removal of monetary stimulus is likely to become necessary". Those purchases are slated to run at least through year end, when they will total 2.2 trillion euros.

Sterling strengthened to $1.2995 in early European trade, briefly rising as high as $1.3007 after Haldane told the BBC the bank needed to look seriously at raising rates.

Last week, BoE official Andy Haldane, a long time policy dove, suddenly turned hawkish and hinted at raising United Kingdom interest rates in 2017.

The Pound would typically be expected to benefit if the Bank increased interest rates as higher rates attract more worldwide capital.

Finally, a pair of officials from the Bank of Canada also suggested the central bank could raise rates sooner-than-expected.

Sterling also rose by nearly a cent against the dollar, hitting a five-week high of $1.2936 to the pound.

Other types of non-mortgage borrowing, including personal loans and overdrafts, showed a £1.3 billion increase in May, the biggest jump since November previous year.

  • Marjorie Miles