Pound hits 35-year low versus US dollar
The pound hit a 31-year low overnight versus the US dollra, in a move that some analysts said was not worrisome so long as the depreciation was "orderly".
Indeed, quite the opposite might hold true, argued Jonathan Loynes, chief European economist at Capital Economics.
In his opinion, the fall in cable - as the exchange rate between the pound and the greenback is termed in FX mrakets - was an expression of investor anxiety regarding the possible fallout after Brexit and a reaction to some negative developments following Brexit, such as the temporary suspension of several commercial property funds.
However, he added that the biggest factor behind the pound´s decline was the underlying shift in expectations for the Bank of England´s monetary policy.
"This re-assessment of the policy outlook has been fuelled by the deliberately dovish signals from Bank of England Governor Mark Carney, which imply that the Monetary Policy Committee is quite happy with the pound’s current level and would not be averse to a further depreciation," he said.
Cable plumbed its weakest level since 1985 during Asian trading hours, falling to 1.2795, although as of 12:09 BST it had recovered to trade just 0.22% lower to 1.2990.
That was 14% less than its pre-Brexit high and versus the euro it was to be seen at €1.17, while in trade-weighted terms Sterling had depreciated by more than 10%.
In parallel, the yield on the benchmark 10-year Gilt was four basis points lower to 0.736% and COMEX-traded front month gold futures were up by another 1.16% to $1,374.50/oz..
Dollar/yen was off by 1.24% to 100.47.