• Monday, June 24, 2024
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UK pound falls below $1.30

Wads of Pound Sterling banknotes are pictured at the GSA company's headquarters in Vienna

The pound remained below $1.30 on Wednesday, a level not seen since 1985, with the currency market forecasting further weakness.

As investors sought the haven of top tier government debt and gold, attention remained firmly on the pound, after its latest slide was driven by a number of large UK asset managers halting retail investors from withdrawing money out of property funds.

The dramatic slide in the pound from $1.50 last month has fanned concerns that foreign investors may sell their UK assets as they try and get ahead of a deeper decline for the currency.

Andy Scott, economist at HiFX said: “The fears over Brexit are quickly being realised with an initial heavy sell-off following the shock result, followed by this second wave of investors who held their nerve initially, but are now deciding that they’d rather accept the losses so far than risk losing more.”

Mr Scott added: “The pound is now clearly seen as a high risk asset and when market sentiment becomes very risk averse, it will come under pressure as seen over the past two days.”

After a 20 cent decline in the wake of Brexit, the pound maintained its downward momentum against the dollar early on Wednesday, falling a further 2 cents. At its weakest level, sterling dropped 1.7 per cent to $1.2796.

The currency trimmed losses and was down 0.6 per cent at $1.2942 during London afternoon trade. Against the euro, the pound has slipped to £0.8550, the weakest level in nearly three years and has also depreciated sharply against other major currencies.

George Saravelos, strategist at Deutsche Bank reiterated that he thinks the decline in the pound has much further to run, heading towards $1.15, while the euro is set to rise towards 90p. Even that “maybe understating” it, he added.

Simon Derrick, chief markets strategist at BNY