GBP has dived to one-week lows after a speech from Governor Mark Carney at Mansion House.
Sterling is buying €1.137 down from €1.144 prior to the address.
Speaking to London’s banking community alongside finance minister Philip Hammond a day after Brexit negotiations begun he said: “Before long, we will all begin to find out the extent to which Brexit is a gentle stroll along a smooth path to a land of cake and consumption.
“Monetary policy cannot prevent the weaker real income growth likely to accompany the transition to new trading arrangements with the EU.”
Prior to his speech, the pound had remained steady since last week, after spiking briefly in the wake of the shock Bank of England interest rate vote.
Sterling climbed on Thursday as policymakers voted 5-3 on a rate hike, which was widely expected to sit at 7-1.
Naeem Aslam, chief market analyst at Think Markets, said: “The vote of 5-3 between the MPC (Monetary Policy Committee) members is something of shock which shows that there is some disagreement in the committee and this has pushed the GBP higher.
“We have so much uncertainty in the market and it is shocking that some members think they should increase the interest rate.”
The hint at a possible interest rate rise sent the pound soaring on Thursday, but not for long.
Governor Mark Carney was due to give his ensuing speech on monetary policy that same day.
The speech has directly caused the exchange rate’s downward spiral, due to the absense of a positive economic outlook.
Chancellor Philip Hammond also postponed his speech to today, speaking on the state of Britain’s economic position.
While the drag from inflation on the world’s fifth-biggest economy is likely to fade next…