Pound Pares Drop Versus Dollar, Euro After Carney Named BOE Head

By Lucy Meakin - Nov 27, 2012 12:26 AM GMT+0800

The pound pared declines against the dollar and euro after Bank of Canada Governor Mark Carney was unexpectedly appointed as the next head of the Bank of England.

Carney will take the helm of a British central bank that’s preparing to become the most powerful in the world as it absorbs broad new powers to oversee the financial system and prevent another crisis. Ten-year gilts pared an advance that pushed yields to the lowest in almost a week. Sterling earlier slid to a the least in a month against the euro as European finance ministers meet for talks on an updated aid package for Greece.
This is sterling supportive “in the sense that he has credibility and that he understands that financials are at the core of the U.K. economy, which will help” the currency, said Sebastien Galy, a senior foreign-exchange strategist at Societe Generale SA in New York. “The issue is that he will try to maintain a weak pound to help the economy rebalance but that is not much different from his predecessor.”

Sterling fell 0.1 percent to $1.6011 at 4:09 p.m. London time after sliding to $1.5997. It traded at 80.96 pence per euro after earlier dropping to 81.10, the weakest level since 0ct. 24.
The 10-year gilt yield fell one basis point, or 0.01 percentage point, to 1.84 percent, after sliding to 1.816 percent, the least since Nov. 20. The 1.75 percent bond due in September 2022 rose 0.07, or 70 pends per 1,000-pound face amount, to 99.24.

To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net