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Tags: pound | Carney | England | Brexit

Pound Tumbles to 31-Year Low as Selloff Resumes Before Carney

Pound Tumbles to 31-Year Low as Selloff Resumes Before Carney
(Stock Photo Secrets)

Tuesday, 05 July 2016 07:00 AM EDT

The pound fell to its weakest level in three decades against the dollar, exceeding lows reached in the aftermath of Britain’s vote to leave the European Union.

Sterling sank to its lowest since 2013 against the euro before Bank of England Governor Mark Carney gives a press conference in London, in which he may outline more tools to contain the fallout from the U.K.’s decision to quit the bloc. On Tuesday, the central bank cut its capital requirements for U.K. lenders and pledged to implement any other measures needed.

There are increasing signs that the U.K. vote is weighing on investor confidence. Scotland-based Standard Life Investments suspended trading in its 2.9 billion-pound ($3.8 billion) fund this week, after seeing an increase in redemption requests “as a result of uncertainty for the U.K. commercial real estate market.” Data published by YouGov Plc and the Centre for Economics and Business Research on Tuesday indicated that pessimism about the economic outlook almost doubled following the June 23 referendum.

“There’s a lot of nervousness in the sterling market,” said Thu Lan Nguyen, a currency strategist at Commerzbank AG in Frankfurt.

For a look at the British pound’s 100 years of debasement, click here.

The pound declined as much as 1.3 percent to $1.3115, the lowest since 1985, and was down 1.2 percent at $1.3129 as of 10:40 a.m. London time. The U.K. currency slid 1.1 percent to 84.85 per euro, after touching 84.91 pence, the weakest since October 2013.

Carney Speaks

Almost three quarters of economists surveyed by Bloomberg expect the U.K. to slide into recession and the BOE’s Carney has said the outlook for the economy has “deteriorated.” He will speak at a news conference at 11 a.m. in London after the release of its bi-annual Financial Stability Report.

Investors are also digesting weaker-than-anticipated data which suggest the referendum was hindering the economy even before the shock vote to leave. Reports this week have shown U.K. construction unexpectedly shrank at the fastest pace since 2009 in June, while growth in services output slowed.

“The weakness of the pound reflects building concerns over a sharp economic slowdown in the U.K.,” said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubish UFJ Ltd.


© Copyright 2024 Bloomberg News. All rights reserved.


Markets
The pound fell to its weakest level in three decades against the dollar, exceeding lows reached in the aftermath of Britain's vote to leave the European Union.
pound, Carney, England, Brexit
368
2016-00-05
Tuesday, 05 July 2016 07:00 AM
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