Mark Carney's comments swiftly undid what had been a healthy bounce for the pound on slightly higher than expected inflation numbers, driving it to $1.4130, its lowest against the dollar since early 2009.
Against the euro, sterling added almost another percentage point to falls registered since the start of December.
It is down 9 percent against both currencies in that time, putting it at its weakest in a year on a trade-weighted basis.
"The (Carney) speech was obviously very, very dovish and we have touched the long term lows as a result," said Thomas Suter, chief executive of currency focussed Swiss hedge fund Quaesta.
"Having said that, the move does look quite exaggerated and we don't think that it will go much lower. The yield spread with Treasuries has not moved."
Sterling has suffered from a wave of speculative and protective bets on derivatives markets against risks from a referendum on Britain's European Union membership, now widely expected by markets this year.
Despite that, and the past six weeks' slide in spot rates for the pound, Carney said the "strong" exchange rate would continue to drag on UK inflation that is still moored to zero.
"On a trade-weighted basis sterling did very well last year and given the concern over inflation and competitiveness, that strength was probably unwelcome," said Alvin Tan, a strategist with Societe Generale in London.
"So a weak currency at this level or even a bit lower I think is something that they (the Bank of England) would welcome. Certainly it would help with this disinflationary danger that hangs over the UK with oil prices this low."
By 1634 GMT, sterling was 0.7 percent lower at 76.96 pence per euro.
Carney said global and domestic growth had proved weaker than he had expected in the middle of last year, when he predicted that a decision on when to raise interest rates would have come into "sharper relief" by early 2016, and that he would have to see stronger growth and inflation before any rate hike.
While many still regard the BoE as the most likely to follow the U.S. Federal Reserve's lead in raising interest rates, market pricing shows the market has all but abandoned any expectations of a rise this year.
"Certainly such rhetoric pushes back rate hike expectations more firmly into next year," said Neil Jones, head of hedge fund FX sales at Mizuho in London.
Earlier data from the Office for National Statistics showed consumer prices inched up 0.1 percent on the month to take the annual rate of inflation to 0.2 percent, higher than economists' expectations.
"We don't think (the data) changes the picture for the BoE," said Nikolaos Sgouropoulos, currency strategist at Barclays, which last week pushed back its interest rate hike expectations to the fourth quarter.
(editing by John Stonestreet)
By Patrick Graham and Jemima Kelly
