Wednesday, October 5, 2016
The pound hits a new 31-year low against the dollar and 5-year low against the euro
Sterling's slide continues on Tuesday, breaking through its post-referendum low to reach levels not seen in over 30 years.
The pound is now at a fresh 31-year low against the dollar and a 5-year low against the euro.
Here is how the pound looks against the dollar at 4.40 p.m. BST (11.40 a.m. ET):
Sterling hit an intraday low of $1.2736 on Tuesday. That surpasses the post-referendum low of $1.2798 reached on the day after the vote, which was the lowest level seen since the mid-1980s. Sterling is now at its lowest point in 31 years. FXTop.com
The pound reached a record low of $1.05 against the dollar in February 1985, according to the BBC. Hopefully sterling won't break that boundary any time soon. If it does, we will be in uncharted territory.
The pound tanked on Monday after Theresa May announced the date for Article 50 to be triggered, beginning the official process of Britain leaving the European Union. There aregrowing fears that Britain will have a "hard Brexit." which would see the country lose access to the EU's single market. This would likely bring about an economic shock.
A Bloomberg story on Tuesday morning claiming that financial services will get no special post-Brexit deals from the Prime Minister is not doing much to assuage fears. Financial services contribute £65 billion to the UK economy and 5,500 firms with a turnover of £9 billion rely on passporting rights to give them access to the EU.
Sterling is diving against the euro on Tuesday as well as the dollar, hitting a 5 year low. Here's how it looks at 4.40 p.m. BST (11.40 a.m. ET):
The intraday low for the pound against the euro so far on Tuesday is 1.1376, its lowest level since 2011.
Connor Campbell, a financial analyst at SpreadEx, says in an emailed statement:
"It seems that it is going to be hard to provide a tourniquet for sterling’s recent wounds given the solidity of the newly announced Brexit timeline (with March set to go down in the history books as when Article 50 was triggered), and the firmness with which May stated her intention to chase border control even if it means relinquishing Britain’s position in the single market."
The one silver lining of the plummeting pound is that it has sent the FTSE 100 surging past 7,000 to its highest level in over a year. The index is made up largely of international companies who make money in dollars, so a weaker pound means the stock of these companies, which is bought and sold in sterling, suddenly looks cheap.