Sterling sinks below $1.30 for the first time in over three decades

 
Jake Cordell
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Sterling has been engulfed in early post-referendum economic data pointing to a slowdown
Sterling has been engulfed in early post-referendum economic data pointing to a slowdown (Source: Getty)

Sterling has been knocked back today, tumbling against the dollar and the euro as the ramifications of the Brexit vote continue to filter through.

The pound was off by two per cent against the dollar, falling to exactly $1.2997 shortly after the London market close.

It bounced after falling under the psychological barrier, climbing back to dizzy highs of $1.304.

Earlier sterling also sunk to its lowest level since 2013 against the euro, down 1.3 per cent at €1.1767.

The currency was sent lower after two leading investment platforms suspended trading in their real estate funds following a spate of withdrawals. Both Standard Life and Aviva announced they have frozen withdrawals due to trouble in the UK commercial property sector, while new Financial Conduct Authority (FCA) chief Andrew Bailey argued it was a "sensible decision".

Nevertheless, it spooked the currency markets and sent the pound into a fresh downwards spiral just after the Bank of England governor Mark Carney had appeared to stop the rot by announcing a reduction in capital buffers at the biggest UK banks and the potential for £150bn of loans to the real economy.

The services purchasing managers' index (PMI) also disappointed following yesterday's "dire" seven-year low on the construction PMI as early evidence shows hallmarks of an economy in the slow lane - if not reversing.

The Bank of England's rate-setting monetary policy committee (MPC) will meet for the first time since the referendum next week with Carney paving the way for a cut to interest rates over the summer.

Colin Dewar, head of currency dealing at Hargreaves Lansdown said: "The increasingly poor picture surrounding the UK’s economy makes next week’s MPC meeting all the more important. Sterling is likely to remain subject to volatility until we have a clear picture of the central banks’ monetary policy path."

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