LONDON — The pound dropped to a new post-election low on Wednesday, dragged lower by Bank of England Governor Mark Carney’s assertion that interest rates should not increase anytime soon.
That combination has pushed the currency below the $US1.26 for the first time since Prime Minister Theresa May’s shock failure to win a majority at the general election 13 days ago. By 8.35 a.m. BST (3.35 a.m. ET) the pound is down by 0.29% to trade at $US1.2593.
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In focus for sterling later on Wednesday will be the Queen’s Speech when May puts her legislative plans to parliament despite not having an outright majority in the House of Commons.
May is expected to abandon several of her major pledges from the Conservative Party’s general election manifesto in order to get the legislative programme through the house and allow her to create a new government.
Sterling’s fall on Wednesday follow on from a big drop on Tuesday. The currency tumbled more than 1% during trade on Tuesday after Carney told financiers at London’s Mansion House that he does not believe interest rates should be increased, saying: “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.”