The Pound Sterling fell against the US Dollar to its weakest price in 31 years as fears of the impending Brexit take its toll on the Pound. Earlier this week, Theresa May, the British Prime Minister, announces that the formal process to withdraw from the EU would begin by March 31, 2017. As a result, the Pound has thus far lost more than 1.5%; since the June 23rd vote, the Pound has lost about 15% against the Greenback. The major worry for investors now is that the likelihood of a “hard Brexit” could ultimately result in a major shakeup of the UK’s financial sector with the exodus of a number of London’s banks.
As reported at 10:38 am (BST) in London, the GBP/USD was trading at $1.2749, down 0.70% and establishing a new daily low; the day’s high was at $1.2860. The EUR/GBP was trading 0.29% higher at 0.8759 Pence moving well away from the pair’s session low at 0.8704 Pence.
US Rate Hike Hopes Resurface
The US Dollar is also getting a lift after the release of an unexpectedly upbeat survey of manufacturing purchasing managers for September. That news offered investors newfound hope of a 2016 rate increase. The ISM reading came in at 51.5 against expectations of a slight rise to 50.3. For reference, any number above 50 is an indication of expansion in the sector. Additional PMI figures will be released tomorrow which, if positive, could provide a further boost to rate hike hopes.