* Sterling outperforms, other pairs stick to ranges
* Carney tells Sunday Times UK rates may rise before pay
* Dollar steady after first weekly loss since early July
* Eyes on Jackson Hole meeting later in week
By Patrick Graham
LONDON, Aug 18 Sterling was the main mover on
major currency markets on Monday, recovering from last week's
multi-month lows after the Bank of England said interest rates
might have to rise before wage inflation picks up.
The dollar, knocked back last week after a strong run since
early July, was roughly steady against the yen and euro and a
basket of currencies used to measure its broader strength,
hampered by U.S. Treasury yields that were close to 16-month
Sterling rose after BoE Governor Mark Carney said in a
newspaper interview that UK rates may have to increase even
before the growth of real wages recovers, backtracking from
comments last week that suggested the opposite and prompted
markets to push back bets on a first hike.
"The comments in the (Sunday) Times were definitely a
surprise to markets and that's what is behind this move this
morning," said Adam Myers, head of European FX strategy with
Credit Agricole in London.
The pound has taken a hammering over the past month, hurt by
the suspicion that all of the best news on the UK economy has
been priced in and that the bank might not be quite as quick as
some had expected to raise rates.
After a sixth straight weekly loss against the dollar, it
gained around a third of a percent against the euro and the
dollar in early European deals, trading at 79.97 pence per euro
Myers said the week might prove rocky for the dollar after
an uncertain performance so far in August that has seen it fail
to build on improvement which prompted many analysts to predict
the greenback was finally on for a longer run higher.
The wait for the annual U.S. meeting of central bankers in
Jackson Hole might help hold off bigger moves this week, he
said, but there were risks to the dollar particularly against
"After what was a very exciting July, the market has tried
both ways over the past couple of weeks," Myers said.
"The euro tried several times to break out higher last week
and was stopped each time around $1.34. I think the danger is we
may see that (barrier) broken this week."
Dollar, euro and yen rates were little changed from their
levels late in New York on Friday, when heightened tensions in
Ukraine drove global bond yields to fresh lows.
The euro last traded at $1.3387, flat on the day and
well within the slim $1.3333-$1.3445 range seen so far this
month. The dollar bought 102.45 yen, a touch more than
Friday, while against a basket of currencies it edged down to
"Just looking at the dollar index, we dipped down below what
I see as a key level of 81 and a half, and we're starting off
the week below there," said Bart Wakabayashi, head of currencies
at State Street in Tokyo.
"It's very hard to judge, with thin summer markets, but it
should be a bearish sign for more dollar retracement."
Data on Friday showed that speculators reduced bullish bets
on the dollar in the week ended Aug. 12, net longs declining for
the first time in four weeks.
U.S. Treasury yields remained close to recent lows, with the
yield on the benchmark 10-year U.S. Treasury note at
2.357 percent in Asia.
The Jackson Hole symposium starts on Thursday, with Federal
Reserve chief Janet Yellen due to speak on Friday.
(Additional reporting by Lisa Twaronite in Tokyo and Ian Chua
in Sydney, editing by John Stonestreet)