British pound hits three-decade low
October 5, 2016
Sterling hit a 31-year low of $1.2686 shortly after trading started Wednesday before recovering to over $1.27. The pound also fell as much as 0.4 percent to 88.31 pence per euro before clawing back some ground later in the day.
The pound's further drop came amid fears of a hard Brexit. Sterling had been pummeled for weeks over worries that the UK would prioritize curbing immigration over promoting trade in its divorce from the EU.
The result of those fears had been a drop in foreign investment and cutbacks by banks and other global companies.
No fundamental change in sight
"Sterling has finally and belatedly responded to the heightened and prolonged Brexit uncertainty, notwithstanding a resilient UK economy and prospects of significant UK fiscal stimulus," Amplifying Global FX Capital's Greg Gibbs said in a statement.
"The outlook remains negative, but it's risky to jump on the selling bandwagon," he warned.
Britain's financial industry could lose up to 38 billion pounds ($48.3 billion, 43 billion euros) in revenue in a hard Brexit scenario that would leave the country with restricted access to the European Union's single market, a fresh report by consultancy firm Oliver Wyman said Wednesday.
"With rate expectations linked to long-term uncertainty and as fears of a hard Brexit remain intact, it seems unlikely that sentiment is changing for the better," Credit Agricole analysts said in a note.
hg/jd (Reuters, AFP)