Economia

Brexit risks to UK economy in focus as Hammond, Carney speak

Brexit risks to UK economy in focus as Hammond, Carney speak

Shortly after the market open, investors will be turning their attention to a speech by Bank of England Governor Mark Carney, who will be delivering a speech at Mansion House in London.

The pound lost nearly a cent against the dollar to $1.2694, as the text of a speech due to be delivered by Carney last week showed he would like to see consumption and wages strengthen before the Bank of England hikes rates.

"Given the mixed signals on consumer spending and business investment, and given the still subdued domestic inflationary pressures, in particular anaemic wage growth, now is not yet the time to begin that adjustment", he said.

"In the coming months, I would like to see the extent to which weaker consumption growth is offset by other components of demand, whether wages begin to firm, and more generally, how the economy reacts to the reality of Brexit negotiations".

"Market sentiment towards sterling had shifted towards a possible rate hike followiing a shock shift to 5-3 last week from the MPC (Bank of England monetary policy committee)", said Mizuho's head of hedge fund FX sales, Neil Jones.

The pound sank on the news, falling 0.4% against the dollar and euro to 1.26 and 1.13 respectively.

He said the United Kingdom will find out gif Brexit is "path to a land of cake and consumption".

Mr Carney also waded into the row over euro-clearing after the European Union released proposals which could force operators to leave London as a result of Brexit, putting the capital's multi-billion industry at risk.

"Fragmentation of such global markets by jurisdiction or currency would reduce the benefits of central clearing", he said.

He also added his voice to concerns that wrenching clearing from London would result in higher costs, arguing that "fragmentation is in no one's economic interest".

"The European Commission´s proposals announced last week recognise the importance of effective cooperation arrangements between the relevant EU authorities and their overseas counterparts", Carney said.