Sterling steadies after its worst three-week performance since 1992

 
Caitlin Morrison
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UK Pound Rises Above Two Dollars
The pound crashed against the dollar earlier this week (Source: Getty)

Sterling steadied today after a tumultuous run over the past few weeks that saw the currency touch 31-year lows.

The pound rose by 0.24 per cent against the dollar this morning, to $1.2939, and was up 0.13 per cent against the euro - £1 will now buy €1.1684 on the money markets.

On Wednesday, the pound fell to a 31-year low, dipping to a new low of £1.2798 at one point. And the past three weeks marks sterling's worst performance since the currency crisis in 1992, when Britain left the Exchange Rate Mechanism.

The recent Brexit vote has hurt the pound, and analysts have warned that sterling is likely to fall further, with Goldman Sachs predicting a $1.20 floor and Deutsche Bank estimating $1.15.

"There is much more to go before sterling is considered excessively 'cheap'," said Deutsche's George Saravelos.

"Even a move down to $1.10 and €1.03 would only take sterling to ... valuation extremes that have not been uncommon in the past."

Today's improvements follow the news that consumer confidence has suffered its sharpest monthly decline in more than two decades.

The GfK consumer confidence index showed that Brexit uncertainty has led to a tightening of the purse strings, as people try to save more and delay big ticket purchases.

To put the pound's recent performance into context, new research out today from SalaryFinance suggests that the 10 per cent slump in sterling over the past two weeks has pushed the price of foreign holidays up by £200.

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