The pound sank with gilt yields as Britain’s central bank governor underlined his dovish stance in the face of Brexit. European stocks rose a third day amid a bullish mood for equity investors, and the dollar was steady as this week’s stream of Fed speakers continued.
The U.K. currency weakened a second day as Bank of England Governor Mark Carney said he is still worried about the impact of Brexit on the economy and signaled he won’t be rushing to raise interest rates anytime soon. Sterling’s weakness boosted the U.K.’s benchmark equity index, which gained along with most European measures. Hong Kong shares retreated ahead of MSCI Inc.’s decision on whether to include China’s domestic equities in its main indexes.
Governor Carney’s first major speech since May comes a day after negotiations over Britain’s exit from the European Union formally began, and his comments addressing weakness in the U.K. economy and subdued inflation join a raft of talking points for investors this week. MSCI’s announcement is due in a matter of hours, while the latest in a string of appearances from U.S. central bank officials saw Federal Reserve Vice Chairman Stanley Fischer speaking in Amsterdam.
Treasuries fell Monday after Fed Bank of New York President William Dudley said halting the tightening cycle now would imperil the economy. His comments were followed by remarks from Chicago Fed President Charles Evans, who said “the current environment supports very gradual rate hikes and slow preset reductions in our balance sheet.”
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