British pound slides further

Pressure on sterling and the euro has intensified as markets digest the Brexit vote.

The lack of clarity from the UK after the vote has undermined market confidence. Picture: AFP/ Odd Andersen.

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6:23AMJune 28, 2016

The pound is continuing its steep slide against the US dollar as concerns about the British economy deepen in the wake of the UK’s Brexit vote.

The pound plunged 3.41 per cent against the greenback to $US1.32 at 6.20am (AEST), following on from Friday’s colossal 10 per cent dive. At one point, the pound fell to its lowest level since 1985 at $US1.31.

Against the euro the pound was also down, falling 2.37 per cent at 1.19 euro.

The pound was trading at about $1.79 against the Aussie dollar, from a previous $1.96 before Thursday’s referendum.

Chancellor George Osborne had contributed to a mini-rally early on Monday morning after he spoke of Britain’s strong economy and claimed the country remains “open for business”.

However, the gains soon evaporated, with experts warning that months of uncertainty could see more volatility.

Chris Saint, senior analyst at Hargreaves Lansdown, said: “Further significant losses for sterling aren’t out of the question, especially if incoming data confirms the UK economy’s slowdown and lifts the likelihood of further Bank of England stimulus to support growth.

“Britain’s vote to leave the EU has driven investors towards safe haven currencies, such as the Japanese yen.

“The yen rose by a huge 12 per cent against the pound on Friday and has gained almost 4 per cent more today, despite Japanese authorities saying they will intervene to try to stem the yen’s rise if they deem it excessive.”