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Sterling sharply lower as BoE Carney dismisses a rate hike

EURUSD News by Allie Longford on 10:15 June 20, 2017 EST
The British pound takes a dive on Tuesday after BoE Governor Mark Carney dampened expectations for a rate hike saying it's not the time yet. M

From his Mansion House speech the Australian said that "now is not yet the time to begin that adjustment" of monetary policies although "different members of the MPC will understandably have different views about the outlook and therefore on the potential timing of any Bank Rate increase. But all expect that any changes would be limited in scope and gradual in pace."

He also added that "the extent to which weaker consumption growth is offset by other components of demand, whether wages begin to firm, and more generally, how the economy reacts to the prospect of tighter financial conditions and the reality of Brexit negotiations."

About the Brexit negotiation process starting this week he noted that "before long, we will all begin to find out the extent to which Brexit is a gentle stroll along a smooth path to a land of cake and consumption,".

Last week, three BoE policymakers of the eight on the Monetary Policy Committee unexpectedly voted to raise interest rates which at present are stuck at their historic lows. Carney voted to keep them at 0.25 percent giving no sign he is not likely to change his mind in the short term.

Sterling sank from $1.2755 to a one-week low of $1.2660 after the text of Carney's speech was released. It also dropped more than half a percent to a five-day low of 88.02 pence per euro.