Currency markets struck by warning not to expect Bank to cushion Brexit blow” – reaction from FEXCO Corporate Payments.

David Lamb, head of dealing at FEXCO Corporate Payments, comments: “It (the pound) took a hefty prod from the media, but Mark Carney has finally uttered the ‘r word’ – admitting that a Brexit could tip the UK into a technical recession.

“But as the Governor’s at times tortuous press conference made clear, the full ramifications of a vote to leave the EU are unknown, and will remain effectively unknowable. Despite attempting to ignore the elephant in the room, the Bank’s Inflation Report paints a picture that’s scarcely any more rosy. Even assuming that the referendum delivers a vote for the status quo, the Bank predicts sluggish growth and only a gradual increase in interest rates.”

“While both the In and Out campaigns will be poring over the Governor’s words for any evidence of bias either way, the currency markets have been more struck by his blunt warning that if the worst happens, we shouldn’t rely on the Bank to cushion the blow.”

“With Governor Carney conceding that ‘monetary policy cannot offset all the effects of a shock’, the spectre of weak growth and years more of low interest rates has done little to reassure Sterling watchers.

“As a result the Pound has lost the ground it gained against both the Dollar and the Euro after the MPC voted unanimously to hold interest rates.”