Mark Carney's first week: Pound slumps below $1.50 after new governor backs more monetary stimulus

Sterling hits its weakest since mid-March

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The Independent Online

The pound has slumped to a four-month low, below $1.50, after the Bank of England's denial that it plans any interest rate hike.

Dipping to $1.4991, Sterling hit its weakest since mid-March. It also weakened against the euro, though not so dramatically.

The news follows a statement after new governor Mark Carney's first policy meeting, in which he effectively ruled out rate rises for years to come. The bank's Monetary Policy Committee left interest rates at their historic low of 0.5%, and quantitative easing - the electronic creation of new money - unchanged at £375bn.

Nawaz Ali, market analyst at Western Union Business Solutions, told Reuters: "An unusual statement with guidance was proof for sterling bears [investors who believe the pound will decline in value] that Carney's arrival will mark the start of more monetary activism.

"Investors have every reason to anticipate a change in monetary policy in the coming months, which will mean more downside for sterling."

And Mario Draghi, head of the European Central Bank, said on Thursday that they were taking unprecedented steps to give so-called forward guidance to reassure the markets that it had no plans to raise interest rates soon.