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Sterling hits new low on 'hard' Brexit fears

Wednesday, October 05, 2016 - 01:48

Britain's pound has fallen again on fears over a so-called ''hard'' Brexit, dropping below $1.27 for the first time since June 1985. And the UK's key services sector PMI has also fallen slightly, with financial services in particular bracing for fallout. Hayley Platt reports.

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Another fall for the pound - this time below $1.27. It recovered a little later but it hasn't fallen that low since June 1985. British stocks again went the other way, as companies enjoy the trade benefits of a weaker currency. But it's the reasons for sterling's dive which present the biggest worry. (SOUNDBITE) (English) OANDA SENIOR MARKET ANALYST, CRAIG ERLAM, SAYING: "I think this has really been triggered by Theresa May's comments over the weekend regarding Article 50 being triggered by the end of March next year. Philip Hammond's, the chancellor's warning's about the economic turmoil." Britain relies on its service sector. And a new survey shows a fall of point 3 in September. At 52.6 - 50 is the recession mark - growth was stronger than expected, making a Bank of England rate cut less likely next month. But financial services are nervous. A new report estimates a so-called 'hard' Brexit - with restricted access to the European Union - could cost the industry up to £38 billion pounds in revenue. (SOUNDBITE) (English) OANDA SENIOR MARKET ANALYST, CRAIG ERLAM, SAYING: "It means banks and other financial institutions have to move at least a section of their operations to Ireland, to Frankfurt to France and that means job losses for the UK." The report was commissioned by industry lobby group TheCityUK. It says without access to the single market 75,000 jobs in the financial sector may disappear. And the government may lose up to 10 billion pounds in tax revenue. That's money it can ill afford with the economy showing signs of slowing. The IMF's new forecast sees a growth rate next year of 1.1 percent from 1.3 per cent in July.

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Sterling hits new low on 'hard' Brexit fears

Wednesday, October 05, 2016 - 01:48