* Carney tells Sunday Times UK rates may rise before pay
* Sterling outperforms, others subdued as Jackson Hole looms
By Ian Chua
SYDNEY, Aug 18 Sterling rose on Monday after the
Bank of England indicated that UK interest rates may have to
rise even before wage growth recovers, backtracking from earlier
comments that prompted markets to push out the risk of a rate
Sterling rose as high as $1.6739, from around
$1.6689 late in New York on Friday. It also firmed against the
euro, which dipped below 80.00 pence from around
Just last week, the pound plumbed a four-month trough of
$1.6657 after the BOE slashed its forecast for wage growth and
stressed that any interest rate hike would depend largely on an
improved outlook for pay.
But in an interview with the Sunday Times, Governor Mark
Carney said he would not have to wait for real wages to turn
positive before raising rates.
Carney, however, has wrong-footed markets before and
sterling bulls appeared to be taking his latest comments with a
pinch of salt.
The other major currencies were biding their time ahead of
more guidance later in the week from a gathering of top central
bankers at the Federal Reserve's annual Jackson Hole symposium
starting on Aug. 21.
This year's focus is on "re-evaluating labor market
"Historically, trading leading into Jackson Hole sees
increased volatility," noted Evan Lucas, strategist at IG in
"Talk so far is that chairperson Yellen is concentrating on
employment and the composition of wage growth and full-time
versus part time percentages; this issue is likely to be echoed
by central bankers around the world as global employment remains
soft at best."
The U.S. dollar, euro and yen were little changed from
where they were late in New York on Friday, where heightened
tensions in Ukraine drove global bond yields to fresh lows.
The euro last traded at $1.3389, well within a slim
$1.3333-$1.3445 range seen so far this month. Against the yen,
the common currency was flat at 136.11.
The greenback bought 102.39 yen, roughly in the
middle of this month's 101.51-103.05 range.
The Australian dollar traded at $0.9317, having
slowly recovered from a dip to $0.9239 earlier in the month.
The key event this week for Aussie bulls is Reserve Bank of
Australia Governor Glenn Stevens' twice-yearly parliamentary
testimony on Wednesday.
Traders, however, expect no fireworks from Stevens, who is
likely to reaffirm the central bank's steady policy outlook.
On the data front, surveys on manufacturing activity in
China and Europe as well as UK inflation and retail sales will
be closely watched this week.
(Editing by Shri Navaratnam)