Friday 31 May 2019 4:47 pm

Pound stumbles towards biggest monthly fall in two years

Sterling was set to complete its biggest monthly fall against the euro in two years today as trade wars and Brexit chaos continued to send investors fleeing the pound for safer assets.

Read more: European stock markets bleed red as Trump takes trade war to Mexico

The pound dropped 0.1 per cent against the euro by 4.40pm UK time to buy €1.132. It had climbed 0.1 per cent against the dollar to hit $1.132 on a day of dollar weakness, but was 3.3 per cent down against the buck for the month.


Global markets were shaken on Friday after US President Donald Trump said he would slap a fresh five per cent tariff on all Mexican imports next month, as a tool to reduce migration from the country to the United States.

Trump tweeted on Thursday night: “The Tariff will gradually increase until the Illegal Immigration problem is remedied, at which time the Tariffs will be removed.”

Following the move, shaken investors fled riskier assets such as shares to buy so-called safe havens such as the Japanese yen and German and US government bonds.

Meanwhile, the race to replace Theresa May as UK prime minister has been hotting up, adding to investors’ nerves that a hard Brexiter could take the crown and lead the UK out of the EU without a deal.

The perfect storm of Brexit and a global trade war caused another day of losses for the pound, taking its monthly fall against the euro to 2.8 per cent.

Read more: Trump threatens Mexico with 25 per cent tariffs over immigrants

“Next week may see the start of a new month, but considering it begins with Theresa May stepping down as Tory head, leading into the circus of the Tory leadership battle, there doesn’t appear to be any silver lining on the horizon for sterling,” said Connor Campbell, financial analyst at Spreadex.

Share


Tags: