Sterling tumbles after dovish comments from BoE's Carney
By Sam Forgione
NEW YORK (Reuters) - The U.S. dollar gained against the sterling and the euro on Thursday, snapping two straight days of losses, after Bank of England Governor Mark Carney said he saw the need for more stimulus and a Bloomberg report hinted at more European Central Bank easing.
Carney said that the BoE would probably need to pump more stimulus into Britain's economy over the summer after the shock of last week's decision by voters to leave the European Union.
Investors were already expecting the BoE to cut interest rates in July or August from an already record low of 0.5 percent, and ramp up its 375 billion pound bond buying plan, too.
Sterling fell more than 1.6 percent to a session low of $1.3207 GBP=D4, less than a cent from its 31-year low of $1.3122 touched Monday. Sterling pared losses and was last down 1.1 percent at $1.3282 in afternoon U.S. trading.
"Carney’s comments today sort of confirm the general bearish view on sterling," said Mazen Issa, senior currency strategist at TD Securities in New York. He said TD expected the BoE to cut rates by 50 basis points in August, and that the sterling would likely fall to $1.20 by the end of the year.
The euro sank against the dollar after Bloomberg reported that the ECB was considering loosening the rules for its bond purchases to ensure enough debt is available to buy following the Brexit vote, citing unnamed euro-area officials.
The euro EUR= was last down 0.34 percent at $1.1086 after falling to a session low of $1.1026. The euro had hit a 3-1/2 month low of $1.0909 on Friday after the Brexit vote. The dollar also gained against the yen JPY= and was last 0.4 percent higher at 103.23 yen.
"You have the two major central banks in Europe once again on the quantitative easing path with renewed vigor," said Joseph Trevisani, chief market strategist at WorldWideMarkets in Woodcliff Lake, New Jersey, in reference to the BoE and ECB. Continued...