The British pound continued its downward spiral today, falling to a fresh 31 year low as political uncertainty after the Brexit vote added another headache for the local economy.
At 8.44am (GMT) the Pound was trading at US$1.2976c after reaching a low of US$1.2796c earlier in the trading session.
With the leadership of the British government in limbo, investors are feeling nervous about investing into the economy which is leading to even less demand for the British currency.
"You're not going to make a big investment decision if you don't have that sort of certainty," said Axel Merk, chief investment officer at Merk Investments.
He also noted that even if the Bank of England steps in to help the situation it won’t matter much if nobody is interested,
"The only thing the Bank of England can do obviously is provide the ability of banks to lend, but if there are no takers, it doesn't help all that much." Mr Merk added.
Predicting even further downside for the pound in the nearest future is Ray Attrill, co-head of foreign-exchange strategy at National Australia Bank who noted that the problems facing the British economy are going to continue,
"We still think that $1.20 is a not unreasonable target given the size of effective like terms of trade shock," he said. "It's like Australia running out of gas or Saudi Arabia running out of oil, particularly in terms of how the financial services sector is potentially going to be impacted." he said.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 66% of retail investor accounts lose money when trading CFDs with this broker. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 66% of retail investor accounts lose money when trading CFDs with this broker. Before deciding to trade foreign exchange you should consider whether you understand how CFDs work, your investment objectives, your level of experience and readiness of taking risk. The possibility exists that you could sustain a loss of some or of all of your initial investments and therefore you should not risk more than you are prepared to lose. Please seek independent financial advice if necessary.
|By clicking "Continue" you will be redirected to the website operated by FIBO Group, LTD company registered in BVI and regulated by FSC. Please familiarize yourself with the Customer Agreement through the link. Click "Cancel" to remain on this page.|