Pound to dollar exchange rate: Sterling DROPS as Carney dismisses BoE interest rate rise

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The pound fell against the dollar yesterday as Carney dispelled interest rate hikes.

The exchange rate dropped suddenly from $1.27502 to $1.26759 to the pound, following the BoE governor’s speech.

Talking at Mansion House, Carney said “now is not the time” to raise interest rates.

Today the exchange rate has dipped even further reaching lows of $1.25901 to the pound.

He added: "From my perspective, given the mixed signals on consumer spending and business investment, and given the still subdued domestic inflationary pressures, in particular anaemic wage growth, now is not yet the time to begin that adjustment.

"In the coming months, I would like to see 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.”

The British pound has fallen against major currencies including the dollar and the euro following the announcement.

Sterling rallied last week after the BoE leaned towards interest rate rise. Three BoE policymakers – Michael Saunders, Ian McCafferty and Kristin Forbes – voted to increase the cost of borrowing.

Speaking to the Daily Star Online at the time, Caxton FX Analysis, Alexandra Russell-Oliver, said: “Sterling rallied after the BoE was more hawkish than expected.

“Two MPC members, Ian McCafferty and Michael Saunders, joined Kristin Forbes in dissenting in favour of hiking rates, in light of accelerating inflation and a stronger labour market.

“Sterling-euro jumped over 0.7% to around 1.1450 for the first time since the election exit polls, and sterling-dollar jumped 0.7% to around 1.2780.”

But today Carney dismissed interest rate hikes saying it's not the right time to raise them.

  • Brexit

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