Sterling fell below $1.26 ahead of the Queen's speech

 
Emma Haslett
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The State Opening Of Parliament
Investors were nervously awaiting the state opening of parliament (Source: Getty)

The pound sank below $1.26 this morning, as investors continued to reel after the Bank of England's governor poured cold water on hopes of an imminent rate hike - and nervously awaited the Queen's speech.

Sterling sank to $1.2596 in early trading, 0.26 per cent lower than last night's closing price.

The fall came after the pound lost more than a cent against the dollar yesterday, following a speech by Mark Carney yesterday in which he said weak economic data coming out of the UK meant now was not the time to raise interest rates.

"In the coming months, I would like to see the extent to which weaker consumption growth is offset by other components of demand, whether wages begin to firm, and more generally, how the economy reacts to the prospect of tighter financial conditions and the reality of Brexit negotiations."

Carney delivered his speech days after three members of the Bank of England's rate-setting monetary policy committee voted in favour of a rate hike, the most hawkish the committee has been in years.

The pound is unlikely to be buoyed by today's Queen's speech, which will be delivered despite the Conservatives having failed to reach a deal with the Democratic Unionist Party (DUP).

Meanwhile, the price of oil tanked to its lowest in seven months as a glut in supply continued to keep prices low.

"Despite the state opening of parliament being just a few hours away, Theresa May is yet to fully secure the support of the DUP, the Irish party unhappy with what they see as a lack of respect from certain sections of the Conservatives," said Connor Campbell, financial analyst at Spreadex.

"The Queen’s speech is set to outline a legislative programme much changed from the Tory election manifesto, with more controversial policies, like grammar schools and social care cuts, given the axe.

"What does end up in the speech is going to be of great interest to the markets, namely what it says about Brexit and whether it will allow May to form a government."

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