Sterling tumbles nearly 1% against dollar after Carney, Powell testimonies

Sterling tumbled against the dollar in American trade following earlier data from Britain and the US, while Bank of England Governor Mark Carney testified in London as Federal Reserve Chair Jerome Powell testified as well in Washington before Congress. 

As of 04:55 GMT, GBP/USD fell 0.76% to 1.3134 from the opening of 1.3235, with an intraday low at 1.3132, and a high at 1.3269. 

BoE Governor Mark Carney and his deputy Jon Cunliffe testified today on the Financial Stability Report before the Treasury Select Committee, in Hampshire, where Carney warned from the consequences of Brexit on the economy, especially if a deal weren't reached with the European Union. 

Earlier UK data showed the unemployment rate for the three months ending May at 4.2% as expected, while average wages rose 2.5% as expected, slowing down from 2.6%. Jobless claims rose 7.8 thousand, compared to a 3K increase in the previous reading, while analysts expected a 7.8K addition. 

Bank of England member Andy Haldane noted that increases in inflation are creating upward pressures on wages, while paving the way for necessary rate hikes to control prices. 

Markets have put an 80% probability for a rate hike in Bank of England's next meeting on August 2. 

In other news, the British Parliament voted in favor of Prime Minister Theresa May's Brexit strategy with a 318-285 margin, showing sharp splits and risks in the path of May's negotiations with the EU. 

US Industrial Data 

Earlier US data showed industrial production rose 0.6% in June, compared to a 0.5% dip in May, while analysts expected a 0.5% increase. 

The Capacity Utilization Rate rose to 78.0% in June from 77.7%, missing expectations of 78.4%. 

Powell Testifies 

Federal Reserve Chair Jerome Powell presented the first half of his Congressional testimony before the Senate Banking Committee, where he expressed his belief that the job market will remain strong, while asserting that stress tests are important tools in gauging the strength of banks, with the Fed seeking to make the tests more transparent.

Powell warned that trade tariffs could hurt the economy in the long term, while tax cuts and government spending will serve to support growth and jobs. 

Finally, Powell believes that gradual rate hikes are the only method of maintaining economic recovery, adding that the goal now for the Federal Reserve it to bring the monetary policy back to normal pre-crisis levels. 

Powell will present the second half before the House Financial Services Committee tomorrow, with investors looking for clues on future monetary policies and interest rate hikes this year.