Pound sterling plunges to 31-year low amid Brexit fears

Pound trading at below $1.35, its weakest since September 1985

Ben Chu
Economics Editor
Friday 24 June 2016 07:13
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The Brexit vote has pummelled the value of the pound to its weakest level against the dollar in more than 31 years and raised the prospect of extreme volatility in other financial markets when they open later today.

Confirmation that the UK has voted to leave the European Union has sent sterling down to $1.33, depths it has not been plunged since 1985.

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Meanwhile, FTSE 100 Index future derivatives, which give an indication of where the stock market will open at 8am, have slumped 8 per cent.

Some analysts have questioned whether the UK stock market will be able to open on time after volatile trading in Japan overnight, in response to the Brexit vote count, triggered automatic trading circuit breakers on the Nikkei Index.

The value of the pound soared as high as $1.50 after polls released after 10pm last night showed a Remain lead. But that mood changed rapidly when the actual count results started to come in, sending it down 11 per cent within hours, the biggest intra-day swing on record.

Nigel Farage: 'Let today be our independence day'

Analysts, including the Bank of England, have warned that the pound could ultimately fall up to 20 per cent in the wake of a Brexit vote.

That would be a collapse on a similar scale to the routs following Black Wednesday in 1992, when the UK crashed out of the European Exchange Rate Mechanism, and also the 2008 global financial crisis.

Since currencies began to float freely against each other in 1971, the pound has rarely languished below $1.40 apart from a period in the mid-1980s when the dollar was extremely strong.

Mike Van Dulken of Accendo Markets identified which company stocks are likely to be punished by traders today.

“We expect the hardest hit stocks to be financials - banks, insurance - followed by housebuilders, with commodities related-names - miners, oil - following close behind” he said.

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