The British pound weakened against the euro on Thursday, even after positive comments from Bank of England Governor Mark Carney. Meanwhile, the UK currency rose against the US dollar following a confirmation that progress was achieved in the Brexit negotiations.
Speaking at an event that celebrated the twentieth anniversary of the independence of the Bank of England, Carney said that the central bank is not omnipotent. He added that, while policymakers can work on supporting growth and keeping inflation dormant, their powers cannot boost productivity in the long term.
Instead, the central bankâs governor said that Brexit, structural reforms, and government spending are considerably more important for the economy. He believes that interest rates can serve as a tool that smooths transitional periods, while helping the bank maintain a balance between inflation and jobs.
Carney confirmed the central bankâs rule in laying the foundations for economic prosperity. However, that rule remains only a single factor in achieving this goal. Carneyâs comments were viewed as positive for the British pound as they ultimately meant that the Bank of England will support the UK economy through Brexit.
A speech that was given by Prime Minister Theresa May also supported the UK currency. May, who gave her speech in Florence, said that the United Kingdom will seek out a Brexit transition period that lasts two years. The prime minister confirmed that her government remains committed to limiting losses that may happen due to Brexit, which improved confidence in the ongoing negotiations.
Following her speech, Brexit Secretary of State David Davis and Brexit European Chief Negotiator Michel Barnier confirmed that notable progress has been made in the fourth round of talks. Few details on the exact nature of the progress were given, but one of the subjects where advancements were made was the Brexit bill.
EUR/GBP traded at 0.8767 at 15:25 GMT on Thursday after touching 0.8807 at 09:40 GMT, the pairâs highest level since September 25. EUR/GBP began trading today at 0.8765. GBP/USD rose to 1.3448, the strongest level for the pair in two days, after starting the day at 1.3401.
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