The pound fell against the dollar Tuesday, tumbling to its lowest level in more than 30 years as worries raged that a "hard Brexit" in the United Kingdom could cut access to the European Union's single market.
Bloomberg reported the pound dropped 0.7 percent to $1.2754 as of 4:50 p.m. London time, and at one time was at $1.2720, the lowest since 1985. It fell 0.8 percent to 87.97 pence per euro after dropping to the weakest since February 2013.
"We have the market facing the reality that Brexit is about to begin and we could be faced with hard Brexit," Jane Foley, a senior currency strategist at Rabobank International in London, told Bloomberg Markets. Foley added that the reports about the financial sector are "just lacing the concerns the market already has about the outlook for growth, investment, and jobs in the U.K. economy."
U.K. currency has already stumbled 14 percent since Britain voted to leave the European Union, Bloomberg said, and the it just completed its worst quarterly run of losses since 1984, with five straight declines.
"Some have suggested sterling was overvalued going into the (June 23) referendum — and that what we are witnessing today is merely a natural correction," stated Ben Chu, a writer with The Independent. "Yet this was not something they said before the vote.
"The strikingly optimistic GDP forecast from the maverick Economists for Brexit group presumed the level of the trade weighted sterling index would be 89.8 in 2016, moderating only slightly to 88.2 in 2017," he continued. "The current level? 76.5."
Prime Minister Theresa May told BBC News that the economic fundamentals of the U.K. economy remained "strong."
"Currencies of course go up and down," May said. "If you look at the fundamentals of the economy, it's strong. If you look at recent economic data, the forecasts coming out now for growth this year, it's all more positive than people had expected it to be."
Michael Saunders, the newest member of the Bank of England's monetary policy committee, will give a speech Wednesday charging that his colleagues are being too pessimistic over Brexit.
"Unless Brexit-related uncertainties rise sharply and/or global conditions disappoint markedly, I suspect that the U.K. economy will be not too bad in the year ahead, with growth in 2017 more likely to be clearly above 1 percent rather than (as the consensus expects) below 1 percent," Saunders is expected to tell the Institute of Directors in Manchester Wednesday in prepared remarks, The Guardian reported.
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