British pound hits a 31-year low against US dollar
The UK’s currency has fallen to a record 31-year low against the dollar, amid a sudden strengthening of the US currency.
The British sterling dropped to $1.20 before rebounding slightly to just above $1.21 by the time the London market closed on Wednesday evening.
This is the weakest level for the currency in over three decades, excluding the flash crash on October 7, 2016 when the pound dropped to slightly lower than that.
The head of currency strategy at the Dutch Rabobank said the economic policies of US President-elect Donald Trump have boosted hopes in markets, strengthening the US dollar.
He also said the British currency is coming under consistent pressure as a result of uncertainty regarding Brexit.
Investors are worried that after the implementation of Brexit, Britain’s limited access to Europe’s single market can negatively affect the country’s economy.
Earlier this week, the pound fell to its lowest level since October amid fears that the country is heading for a full break from the European Union.
This happened after Prime Minister Theresa May suggested a full break from the 28-member block.
Her comments sparked concerns among traders that London is likely to leave the bloc’s single market.
In the referendum held on June 23, nearly 52 percent of British voters opted to leave the bloc, a decision that sent shock waves throughout the world.
According to a Lloyds Private Banking analysis, the pound sterling lost a fifth of its value against nine major currencies last year.
According to research the agency did into 60 currencies, the biggest declines in sterling were against the Brazilian real with a 28.4 percent drop, the Russian ruble with a 28 percent fall, and the Icelandic krona with a 27.9 percent decrease.