Pound sinks after Bank of England hints at rate cut

The pound tumbled on Thursday (June 30) after the Bank of England hinted at interest rate cuts to cushion the blow to the economy from Britain's decision to quit the European Union.
The pound tumbled on Thursday (June 30) after the Bank of England hinted at interest rate cuts to cushion the blow to the economy from Britain's decision to quit the European Union.PHOTO: BLOOMBERG

NEW YORK (AFP) - The pound tumbled on Thursday (June 30) after the Bank of England hinted at interest rate cuts to cushion the blow to the economy from Britain's decision to quit the European Union.

A week after the unexpected Brexit vote, BoE chief Mark Carney sought to reassure anxious financial markets that the central bank would take measures to counter the shock.

"The economic outlook has deteriorated and some monetary policy easing will likely be required over the summer," he said in a speech in central London.

In reaction to the remarks, the British pound dropped 1.0 per cent against the US dollar to US$1.3314. It slid 0.9 per cent against the euro, at 83.40 pence per euro.

"Carney has always been nervous about how Brexit would impact the UK economy," said Ms Kathy Lien of BK Asset Management.

"Now that it is a reality, he is preparing for the worst, agrees with the doom-and-gloom scenario and wants to assure the market that the BoE will be proactive," she said.

The US dollar rose against most major rivals. "Everyone else's problems make US assets more attractive," Ms Lien noted.