Sterling dropped further on Tuesday, slipping beneath $1.23 to its lowest level since the days just after the European Referendum result in June.
The Pound fell over 10 percent on Friday in a ‘flash crash’ on fears that the British government may be gunning for a ‘Hard Brexit’. It continued to slide yesterday and, after a steadying slightly, fell further 0.8 percent further on Tuesday pushing the Bank of England’s trade-weighted index to a nearly-eight-year low of 74.0.
However, Tom Elliott, International Investment Strategist at deVere Group, warned of the repercussions of knee-jerk reactions by investors. He said: “recent economic data from the UK has been stronger than had been expected in the wake of the 23 June referendum. Doom and gloom forecasters may continue to be proved wrong as a hard Brexit is negotiated.”
Elliott put the Pound’s downward spiral down to Theresa May’s ‘Hard Brexit’ strategy, in which single market membership may be sacrifice for immigration control, the UK’s oversize current account deficit and the possibility of lower interest rates.
FTSE hits record intra-day high
The FTSE has benefitted heavily from sterling’s drop rising 0.5 percent on Tuesday to a record intraday high of 7,129.83 points.
The FTSE 100 is currently trading up 0.04 percent at 7,100.24 (1332GMT).
11/10/2016
