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Pound engulfed by 'perfect storm', plunges to 27-month low vs dollar

Credit: Reuters Studio
Published on July 16, 2019 - Duration: 01:08s

Pound engulfed by 'perfect storm', plunges to 27-month low vs dollar

Sterling plunged to a 27-month low against the dollar on Tuesday (July 16) and hit new six-month lows versus the euro as the two candidates to be Britain's next prime minister vied to take the hardest Brexit stance.

David Pollard reports.

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Pound engulfed by 'perfect storm', plunges to 27-month low vs dollar

Britain in sunshine .... But not the pound.

Sterling caught, in the words of one analyst, in a "perfect storm" - as it plunged to a 27-month low against the dollar ..... And hit a new six-month low versus the euro.

These are two reasons, according to traders.

The leadership race for Britain's next prime minister has heard both candidates try to outgun each other on taking a hard Brexit stance.

Markets now see a bigger probability of a no-deal exit from the EU.

Tuesday's (July 16) sell-off saw the British currency weaken 0.8 per cent against the dollar - half a per cent against the euro.... Despite another bumper set of UK pay data.

Core earnings rose by an annual 3.6 per cent in the three months to May - their biggest surge since 2008.

Unemployment remains at its lowest since 1975.

Though the fact that British firms, rather than investing, are hiring workers who can be laid off later could itself be another sign of Brexit nerves.

Markets have increased their net short positions in sterling for four weeks in a row - in a sign of more heavy weather to come.

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