Pound Stays Higher as Carney Says He’ll Remain at BOE Until 2019by and
Sterling is still 2016’s worst performing major currency
Carney takes middle ground between leaving in 2018, 2021
The pound stayed higher as Bank of England Governor Mark Carney announced that he will remain in the role until 2019.
Sterling rose against all of its Group-of-10 peers as Carney announced the decision in a letter to Chancellor of the Exchequer Philip Hammond, saying extending his stay at the central bank will assist an “orderly transition to the U.K.’s new relationship with Europe.” Still the pound only climbed to the highest level since Oct. 27, and remains 2016’s worst-performing major currency.
Canadian-born Carney has chosen a middle path between leaving in 2018 as planned or remaining until 2021 as entitled. Britain is due to start a two-year process to leave the European Union by the end of the first quarter of 2017.
“Carney is a respected central banker and overall I’d say that him staying with the BOE until 2019 would be seen as a positive for the country, but again, near term there are so many other factors weighing on the pound,” said Chris Chapman, a London-based trader at Manulife Asset Management.
The pound climbed 0.4 percent to $1.2229 as of 6:17 p.m. London time on Monday. It fell to as low as $1.1841 on Oct. 7, the weakest level since 1985.
The decision ends speculation about Carney’s future that had raged as he led the charge to safeguard financial markets and the economy following June’s referendum. He has been criticized by pro-Brexit lawmakers for his negative outlook on the consequences that the June 23 vote to leave the European Union could have on the U.K. economy. BOE policy makers are due to announce their latest policy decision on Thursday, after voting to cut interest rates and extend quantitative easing at their August meeting.
While a report last week showed growth exceeded economists’ forecasts in the third quarter, pound traders largely overlooked that data, with the currency proving more sensitive to the political developments surrounding Brexit. It’s down about 18 percent against the dollar since the vote.