Sterling continued to bear the brunt on Monday morning, falling 0.4 percent against the American dollar, as markets remain wary in the wake of the Brexit referendum. Amid speculations that Britain may choose a “hard” exit from the European Union, Sterling faced a “flash crash” last Friday, losing one-tenth of its value in just a few minutes in Asian trades.
Kathleen Brooks of City Index warned that pound, currently just below $1.24, may slide down further to $1.20 over the next few weeks and may not recover anytime soon, writes the BBC. Although from a currency perspective the decline may not be good, but for a country strained by debt and expected inflation, the development may prove beneficial.
H.S.B.C.'s global head of F.X. research David Bloom said the U.K. currency, which used to trade simply on cyclical events and data now shows more reliance on the political and structural environment, reports RTE.
Many fear that Britain may give up full access to European single market to exercise full control at its borders, which will negatively impact trade and foreign investment. Global markets remain on edge despite the fact that U.K. economy has performed unexpectedly well since the Brexit vote, notes The Telegraph.