Pound V euro: GBP rates wilt against the EUR after Mark Carney comments

At the moment the GBP/EUR exchange rate is just about managing to hold above €1.130 but is still down 0.2 per cent on the day's opening levels.

A split vote at the BoE's last policy meeting gave the pound a boost and upped the odds of UK interest rates being raised sooner than previously forecast.

However, Mr Carney appeared keen to crush any hopes of that kind and asserted yesterday that now is not the time for higher borrowing costs.

Mr Carney said: "From my perspective, given the mixed signals on consumer spending and business investment, and given the still subdued domestic inflationary pressures, in particular anaemic wage growth, now is not yet the time to begin that adjustment [rate rises].

"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."

His comments left Sterling broadly weaker and pushed the GBP/EUR exchange rate to a weekly low.

Demand for the pound also remained tepid ahead of the Queen's Speech.

The speech marks the formal start of the new parliament and went ahead despite the fact that the Conservatives have yet to reach an agreement with the Democratic Unionist Party that would allow them to form a working minority government.

Lloyds Bank said in a statement: "The speech traditionally sets out the government's proposed legislative programme, so the focus will be on whether that will now have to be watered down given the government's precarious position.

"A Great Repeal Bill in preparation for Brexit was expected to be a key part of that programme, so it will be particularly interesting to see what is said about this."

However, while the pound is struggling at the moment, there is scope for the currency to recover.

Yesterday, Chancellor Philip Hammond indicated that the government would be willing to work towards a softer Brexit than previously championed, with a transitional deal and a comprehensive trade agreement.

If Prime Minister Theresa May also indicates that her hard line stance is softening slightly we could see GBP exchange rates bounce back on hopes that the UK will ultimately retain access to the single market.

Before the Queen's speech, Mrs May said: "The election result was not the one I hoped for, but this Government will respond with humility and resolve to the message the electorate sent. First we need to get Brexit right.

"That means getting a seal which delivers the results of last year's referendum and does so in a way that commands maximum public support."

With no market-moving news from the Eurozone on the calendar today, further GBP/EUR exchange rate movement will be driven by UK political developments.