Britain’s pound slumped to a three-decade low on Tuesday as concerns over Brexit were compounded by the renewed strength of the dollar on resurgent U.S. interest rate hike expectations.
Sterling was at its weakest since 1985, hit by a growing sense that the UK may be heading for a ‘hard’ Brexit where it severs links to the EU’s single market in favour of total control over immigration.
Robust construction data couldn’t prevent another 0.7 percent fall for the pound as it extended Monday’s heavy tumble to wallow at $1.2750 and a three-year low of 87.50 pence per euro.
“It is now abundantly clear that access to the single market is not on (UK Prime Minister) Theresa May’s list of top priorities and the market is realising that… there is more pressure for the pound in the weeks and months ahead,” said UniCredit’s Global Head of FX Strategy, Vasileios Gkionakis.
Not everything headed south though. London’s FTSE cheered the idea of a weaker pound boosting firms’ exports as it rose 1.6 percent, past 7,000 points and on course for a new record high.
Source: REUTERS, 04 Oct. 2016
