Dubai: Amid fears of a hard Brexit, the British Pound continued to slide, tumbling to its lowest level in more than three decades.
The pound fell as much as $1.2734, down 0.82 per cent for the day, its lowest in more than 31 years, before trading at $1.2750.
The pound has dropped 1.85 per cent since Friday, after the UK prime minister Theresa May gave a timeline for exit from the European Union. The formal divorce would start from March 2017, and May said it won’t be “plain sailing” and that there would be “bumps in the road”.
“There is certainly more towards the downside for sterling but if the BoE [Bank of England] comes out with a more hawkish comment, we could see the floor forming soon. The support level which we are looking is at $1.25,” Naeem Aslam, chief market analyst with Think Markets told Gulf News over email.
David A. Meier, an economist at Julius Baer also expects more weakness. “We stick to our broad message that the Brexit’s adverse effects have been only delayed, but not postponed, expecting further pound weakness once the negotiations kick off,” Meier said.
Apart from May’s comments, euro was helped by easing concerns on Deutsche Bank, which has been in news due to a $15 billion lawsuit from US department of Justice, and the dollar was aided on expectations of a rate hike in December.
Highest level
The FTSE index jumped to its highest level in seventeen months as investors bought exporters, which could benefit from a falling pound.
The FTSE index was 1.58 per cent or 109 points higher at 7,093, after hitting a high of 7,117, its highest level not seen since the past year and a half.
“The near term support is at 6496 and if sterling continue to move towards the downside, we could see the index moving further up,” Aslam from Think Markets,
The pound weakness also coincided with positive Markit’s Purchasing Managers index.
The FTSE 250 index, which is more domestically focused, witnessed the highest level on record of 18,535.4.
