The pound has fallen to its lowest level against the euro since November 2016 after the Bank of England revised down its growth forecasts for the UK economy and warned that Brexit uncertainty was holding back investment.
At pixel time, the pound is down 0.8 per cent against the euro at €1.1067, its lowest level in nine months. That’s bad news for holidaymakers flying out to the continent to escape the British weather.
Sterling is continuing to slide against the dollar too – it fell 0.3 per cent in the minutes after the decision, but is now down 0.7 per cent at $1.3133. The move comes after a brief rally earlier on Monday on the back of better than expected UK services data.
Stephen Gallo, European head of FX strategy at BMO, said he was exiting his short euro position against the pound following the Bank’s decision. “While I don’t see a major pound sell off on the immediate horizon, I now also don’t think a move towards the £0.8800/50 range is feasible either in a relatively short space of time,” he said.
The tone of the press conference was heavily influenced by the focus Carney put on delayed business investment decisions. I think this analysis, for Carney’s sake, conveniently avoids the fact that business investment would not have been that robust even in the case of a Remain vote, and that the BoE’s erroneous bearishness on the economy immediately following the referendum contributed to the fall in the pound, which ultimately subtracted from growth in the first half of 2017.