The standout loser in FX today was GBP, having seen a temporary reprieve from slightly higher than expect inflation data for Dec. However, gains all round were overturned after BoE governor Carney underpinned expectations, and recent comments from fellow MPC members that a UK rate hike was further down the line. Cable eventually took out the 2010 lows at 1.4230, with 1.4200 barriers falling away after some initial support and 1.4100’s less than 30 ticks away from the London lows. EUR/GBP was pressed up to the Monday highs, eventually pushing through here and .7700.
Elsewhere, early Europe was showing signs of a continued relief rally, but USD/JPY struggled above 118.00, turning lower again but holding the mid 117.00’s. EUR/USD could not push past bids ahead of 1.0850, later trading through 1.0900 (largely on EUR/GBP gains), but modestly so. AUD struggled to break away from .6900, with USD/CAD also relatively tight around 1.4500 despite oil tipping $30.0 and later back through $28.0. The Fonterra index fell 1.4%, WMP -0.5%, but there was very little response from NZD. EM currencies still on the back foot. CNH vs CNY still tight despite softer China data overnight as new stimulus measures anticipated.