'Hard Brexit' fears have pushed the pound to multi-year lows

The British government wants to start the EU exit process within six months.


THE POUND SLUMPED to a 31-year low against the dollar today on concerns over the timing and terms of Britain’s planned exit from the European Union.

The currency also struck a fresh three-year low point against the euro. While the British economy has showed signs of improvement in the months since the shock vote to leave the EU, there are concerns about the wider long-term impact of the bloc losing its second-biggest economy.

British prime minister Theresa May announced at the weekend that her government would start the process of leaving the EU within the next six months, possibly leading to Britain severing ties with the single market.

The pound today struck $1.274, its lowest level since 1985. Sterling meanwhile traded at 87.66 pence to the euro – the  weakest level since 2013.

“It seems that it is going to be hard to provide a tourniquet for sterling’s recent wounds given the solidity of the newly announced Brexit timeline,” said Connor Campbell, analyst at traders Spreadex.

GBP to euro Sterling's falling value against the euro
Source: XE.com

Ibec, Ireland’s largest business group, previously described the plunge in the value of sterling following the Brexit vote as a “full-blown currency crisis” for exporters.

The key food and drink sectors, as well as the tourism industry, are expected to suffer most from the falling currency due to their relatively high levels of dependence on the UK market.

Dollar rises

The dollar won support from a rebound for US manufacturing, which helped turn attention back to US monetary policy, days ahead of the release of a closely watched jobs report.

Traders took the data as a sign that the world’s top economy is getting back on track and would be able to withstand an increase in borrowing costs.

The Fed had considered a rate hike last month but held off, saying it wanted to see more evidence of strength.

Additional reporting Peter Bodkin