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 percent against the US dollar to $1.3314. It slid 0.9 percent against the euro, at 83.40 pence per euro.
“Carney has always been nervous about how Brexit would impact the UK economy,” said 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 dollar rose against most major rivals. “Everyone else’s problems make US assets more attractive,” Lien noted.