The pound fell by as much as one per cent from its high point against the US dollar before Carney’s speech, in which he said “now is not the time” for a rate rise.
The currency fell as low as $1.2611 against the US dollar. The last time sterling traded below $1.26 came on the morning before May’s election announcement on 18 April.
Markets had greeted the decision to go to the polls with euphoria, pushing sterling above $1.30 as May’s poll lead over the Labour party grew.
However, the faltering election campaign followed by the loss of the Conservative party majority has since sent sterling lower against major currencies.
The pound enjoyed a brief rally at the end of last week after three hawks on the rate-setting monetary policy committee (MPC) voted for the Bank to raise its key interest rate, the closest the economists had come to a rate hike in six years.
The MPC’s minutes said the tolerance of above-target inflation, which reached 2.9 per cent in May, was diminishing.
Meanwhile ratings agency S&P Global added further pressure after one of its bosses did not rule out a movement in the UK’s credit rating before the Brexit process is finished.