STERLING yesterday tumbled to its weakest level against the dollar since the “flash crash” on October 7.
Bank of England Governor Mark Carney warned yesterday that it would be expected investors would require a risk premium for holding UK assets if the central bank’s independence were called into question. Mr Carney, addressing the economic consequences of the Brexit vote, noted the emergence of any such risk premium would be most prominent around the currency.
The pound, which has plummeted since the Brexit vote and hit fresh 31-year lows repeatedly earlier this month during and in the days after the Conservative Party conference as hard Brexit fears mounted, dropped below $1.21 during trading yesterday. It hit an intra-day low of about $1.2081. Sterling was close to $1.50 on June 23, ahead of the EU referendum result.
On October 7, Thomson Reuters, which owns the Reuters foreign exchange brokerage platform RTSL, said sterling had hit a 31-year low of $1.1491. Bloomberg data put the low at $1.1841.
Appearing before the House of Lords economic committee yesterday, Mr Carney said it was up to the UK Government to set the Bank a target for ensuring price stability, which the Bank’s policy-makers would then decide how to meet.
Prime Minister Theresa May this month unnerved global financial markets by declaring there have been some “bad side effects” from the “super-low” interest rates and quantitative easing programme implemented by the Bank in the wake of the financial crash.
The pound had by 5pm risen from its worst levels to around $1.2162, down 0.42 cents from its close in London on Monday. Sterling also fell against the euro. The single currency was at 5pm trading around 89.49p, up 0.31p.
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