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Carney Stay?

Carney stay or can he go? This is the question that has been rolling through the weekend in relation to the Bank of England governor. The Saturday Times suggested he’ll be off in 2018, the FT suggests that he’s going to hang around. With the BoE interest rate decision and Inflation Report this week, there is a growing expectation that he will quell the speculation by announcing his intentions. He has received a fair amount of criticism in recent months, in part around the Brexit issue and the extent of the Bank’s involvement. If you ask me, much of this has been mis-placed and belies a lack of understanding of the Bank’s role, coupled with the simple fact that the base pre-Brexit scenario (trigger Article 50 the following day) did not materialise (the difference between one day and 280 days). For this week, the chances of a further easing of policy look to be slim. The economy has probably turned out better than the Bank anticipated back in August, but the path of inflation has not and it’s pretty clear from recent comments that we will see an upward revision to the Bank’s anticipated path for interest rates.

Sterling has so far been relatively immune to all of this, after some opening wobbles at the start of the Asian session. The other rolling story over the weekend has been the re-opening of the FBI investigation into Clinton’s emails, which has seen her lead in the polls all but eroded away over the weekend. The dollar weakened into Friday’s close as the story broke, with some recovery having been seen during the Asia session. The Mexican peso, that barometer of election fortunes, has retained its weaker stance as a result of the narrowing of the poll lead. Today is the last trading day of the month, which creates some risks of greater volatility, but in the wider picture, it’s all about waiting for the US election result, more so now that we have seen the polls narrow.

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