Pound tests new 31-year low vs dollar

The pound fell to a new 31-year low on Tuesday ahead of a news conference by the Bank of England’s governor on the aftermath of Britain’s decision to leave the EU.

Just after 0940 GMT, the British currency stood at $1.3131, having earlier slipped below $1.3121, the previous three-decade low it hit following the shock result of the British referendum.

It was quoted at 84.82 pence against the euro, below its two-year post-Brexit level.

“While the decline in the pound is welcome from an exporter point of view the Governor is unlikely to want to see a disorderly decline and as such his tone could well be more measured and a little less dovish with respect to current sterling weakness,” said Michael Hewson, an analyst at CMC Markets.

“Currency markets do appear to be running the risk of getting ahead of events with respect to current sterling weakness with bearish sentiment overwhelmingly negative,” he said.

The Bank of England on Tuesday eased commercial banks’ capital requirements in order to boost lending, as it warned that risks to financial stability “have begun to crystalise” following Brexit.

“There is evidence that some risks have begun to crystallise,” the BoE’s Financial Policy Committee said.