The Great Britain pound sank today, reaching a new 31-year low, as fears of Brexit continued to plague the currency. Coupled with the extremely loose central bank’s monetary policy, that makes the currency completely unattractive to traders (with the possible exceptions of bottom pickers).
During the weekend, Britain’s Prime Minister Theresa May announced the time limit for a start of the Brexit process — end of March 2017. The bold stance of the nation’s leader led to speculations that she may opt for the so-called hard Brexit. It means that Britain relinquishes access to the unified market of the European Union in exchange for stronger control of its own borders. Economists are worried that such decision can hurt trade and damage Britain’s place as one of the world’s financial centers.
Meanwhile, the Bank of England continues to maintain its accommodative policy, and market participants expect additional easing by the end of the year. It is interesting to note that May hinted she does not necessarily approve the bank’s policy, being concerned that very loose policy can have unpleasant side effects.
GBP/USD slumped 1% from 1.2746 to 1.2613 as of 20:09 GMT today. EUR/GBP rallied from 0.8789 to 0.8839. GBP/JPY declined from 131.90 to 131.20.
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