Yesterday’s sharp decline in the pound to its lowest level against the US dollar since the flash crash earlier this month at one stage propelled the FTSE100 to match its highs last week. These levels didn’t last as the index slipped back after the pound rebounded on comments from Bank of England governor Mark Carney to the House of Lords economic affairs committee that the central bank was not indifferent to recent falls in the exchange rate, and its effect on the outlook for inflation. He went on to say that it would be something that the bank would take into account when the MPC meets next week and updates its growth and inflation forecasts. These comments appeared to raise the prospect that a further rate cut was unlikely to come next week, and along with remarks that monetary policy had become overburdened would appear to suggest that further stimulus is unlikely next week, or even this year. Mr Carney also went on to state that the prevailing doom and gloom in the markets surrounding the Brexit vote could well be based on a “mistaken” perception of the future outlook for the UK economy, in the years ahead. While recent commentary from Bank of England officials has been fairly dovish in recent weeks and months yesterday’s testimony from the Mr Carney appears to be the first evidence of a slight change in tone, more towards the stance of fellow MPC member Kristin Forbes who voted against QE at the August meeting. In a reversal of Monday’s price action, while the FTSE100 still had a decent day, on the back of rebound in the basic resource sector stocks, European markets were slightly softer despite an eight month low for the euro against the US dollar, and a positive German IFO report which should really have been the catalyst for the DAX to push on above the 10,800 level, a number that it has consistently been unable to gain a foothold above for all of this year. US markets had a disappointing session yesterday, reversing Monday’s gains, dragged lower by a decline in oil prices amidst continued disagreements amongst OPEC and non OPEC members about the potential, as well as their ability to deliver on a production freeze. Higher than expected APII inventory data overnight also helped weigh on sentiment, as stocks showed a rise of 4.8m barrels, well above the 1.7m barrels expected. Apple’s results after the bell saw the company increase its cash pile to a new record of $237.6bn, selling 45.5m iPhones, more than expected, but still down on the previous two quarters. The company once again didn’t release the numbers for its Apple Watch reinforcing the perception it isn’t selling well. The company also reported outperformance in its App Store and its Apple Music business. Its outlook for Q4 was more positive with an expectation that revenue would rise, as iPhone 7 sales gain traction, though there could also be an expectation that the company may be the beneficiary of Samsung’s recent woes. It’s a big week for the banking sector this week starting with Lloyds Banking Group’s latest trading update this morning where we’ll get to see how much the recent decision to cut rates by the Bank of England has hurt the sector’s profitability. While bank share prices have rebounded from their post Brexit lows investors the recent decision to cut another 1,300 jobs does appear to have been a response to a more difficult operating environment. EURUSD – continues to look weak and with 1.0950 behind it looks set for a move towards the trend line support at 1.0750 from the all-time lows at back at the beginning of the last decade. We need to push back above 1.0970 to stabilise and argue for a retest of the 1.1100 area. GBPUSD – sank back towards its flash crash lows yesterday, rebounding from 1.2080, and continues to struggle for traction. We need to get back above the 1.2270 area to argue for a retest of the 1.2330 area. A break below the 1.2000 area has the potential to open up the previous flash crash lows at 1.1950, and possibly lower. EURGBP – squeezed back to the 0.8980 level before slipping back keeping the risk of a move through the 0.8870 level towards the 0.8780 area. A sustained break back above the 0.8960 area retargets the highs last week at 0.9080. USDJPY – despite a move up through 104.50 to the 104.90 area the inability to close above here suggests this could have been a fake out before a move back lower. This 104.50 area continues to be significant in the context of a move higher. The risk remains of a move lower below 103.00 remains a possibility towards 102.20. CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.