Pound hits another 31-year low as Chancellor Philip Hammond launches Wall Street charm offensive

Chancellor Philip Hammond heads to Wall Street on Thursday in an attempt to reassure top US banks that Britain is still open for business despite the Brexit vote. 

Zlata Rodionova
Thursday 06 October 2016 14:19 BST

A wave of selling has swept the pound down to a fresh 31-year low against the dollar on Wednesday, as Chancellor Philip Hammond flies to New York to reassure US banks after the UK voted to leave the EU.

The currency has fallen below $1.27 level, down to just $1.2632 in afternoon trading, extending Wednesday's sell off.

This is the weakest level the currency has seen since June 1985 and it is down 2.3 per cent from Monday after Theresa May pledged to trigger Article 50 by March 2017.

t recovered slightly to $1.2652 at 4.40pm

Brexit uncertainty will 'weigh on growth'

Sterling has fallen on worries that the UK will be prepared to leave the EU single market as part of the Brexit process so that it can impose controls on immigration.

Paul Sirani, chief market analyst at Xtrade, said: “While May has important negotiations to make, traders will be most focused on how well the Prime Minister drags her cabinet colleagues into a coherent vision and reality of a competitive post-Brexit UK with high-quality free-trade agreements”

“A judicious position would be to expect Sterling to continue falling until March, at which point initial negotiating positions should begin to emerge and signal to traders on the vision, or lack thereof, propelling an independent UK and its ability to frame its future and sell it to traders.”

Naeem Aslam, chief market analyst at Think Markets UK, said sterling is being hit hard by speculators who are determined to drive it lower, adding further losses are still a "real possibility".

He said: "Bears are out for blood and they want to squeeze every single drop out of this trade. Although this is the most crowded trade on the street today, but it is not preventing them to keep piling up their bets.

"My biggest worry is that short squeeze can happen soon as we are approaching towards an important level of support which is at $1.25. However, if the selling pressure remains this aggressive, we could easily break this support and we could be looking at the level of $1.22."

Chancellor Philip Hammond, will be making his first appearance in the US since taking the top job at the Treasury on Thursday.

He will seek to assuage fears that the UK’s position at the centre of a multi-trillion pound industry is under threat after the decision to leave the European Union.

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