Sterling extended losses on Tuesday, to fall 0.4% against the dollar and euro after markets interpreted comments from Bank of England governor Mark Carney as dovish.

Carney said that while interest rate rises might be needed if Brexit progressed smoothly and the BoE was focusing on medium-term dynamics, "in some jurisdictions the impact of uncertainty may warrant a near-term policy response as insurance."

Sterling, which had been 0.2% lower on the day before Carney's speech, raced to a new two-week low of $1.2584 . Against the euro, the pound touched a session low of 89.69 pence.