Banks told to stop betting on sterling

BANKS have been banned from making big bets on the pound as fraught Brexit talks trigger wild swings in the currency.

Mark Carney, governor of the Bank of England, said the pound could soar or plunge depending on whether talks between the UK and EU result in a deal. Because of this, he told MPs that banks had been ordered to stay ‘neutral’ so they could not be wrongfooted.

He was speaking just hours before sterling surged to $1.2750, its highest since May, on reports that a Brexit deal was close.

Carney told the Treasury Select Committee yesterday: ‘The major banks today in the UK are neutral. That ensures that when there is a sharp move, anticipated or not, the banks keep functioning.

‘Developments over the course of the next several days, several weeks, will have material impacts on the value of the pound, the value of shares, the cost of debt for UK banks and companies, in either direction.’

His comments came after the pound also rallied on hopes of a Brexit deal on Friday. Carney said other financial institutions and private investors stood to make a killing from swings in the pound.