By any measure, the pound is having a bad time.

According to a trade-weighted index measuring sterling against a basket of its trading peers, the pound has now slumped to its lowest on record, stretching beyond the introduction of free-floating exchange rates in the 1970s and all the way back to the mid-1800s, according to data compiled by the Bank of England.

The pound’s effective exchange rate, which is weighted to reflect the UK’s trade flows, hit a low of 73.38 on Tuesday – weaker than the depths hit during the financial crisis, Britain’s ejection from the European Rate Mechanism in 1992, and its decision to leave the Gold Standard in the 1930s.

The effective exchange rate has broken fresh ground as the pound has fallen to new 31-year lows against the dollar on the back of Brexit jitters. It slumped as low as $1.2117 in late US trading on Tuesday.

According to the Bank of England’s current formula for the trade weighted index – last rejigged back in 2006 – the biggest contributing weights to the basket are Germany (22.5 per cent), US (16.5 per cent), France (12.6 per cent), Italy (8.3 per cent) and Japan (7 per cent ).

Sterling regained some poise on Wednesday after prime minister Theresa May said she would to hold a parliamentary debate on the UK’s exit proceedings, denting expectations of a “hard Brexit”. </s> Around 07:25 GMT, the pound struck $1.2757, the lowest level since 1985.

Sterling meanwhile traded at 87.56 pence to the euro - its weakest level since 2013.

The pound slumped to a 31-year low against the dollar on Tuesday on concerns over the timing of Britain's planned exit from the European Union, according to traders.

Britain's currency also struck a fresh three-year low point against the euro, while the drops helped pushed London's benchmark FTSE 100 stocks index up to a 16-month high beyond 7,000 points at the open.

Around 07:25 GMT, the pound struck $1.2757, the lowest level since 1985.

Sterling meanwhile traded at 87.56 pence to the euro - its weakest level since 2013.

"It seems that it is going to be hard to provide a tourniquet for sterling's recent wounds given the solidity of the newly announced Brexit timeline," said Connor Campbell, analyst at traders Spreadex.

"In terms of silver linings the pound's protracted demise has continued to lift the multinationals that make up the FTSE 100, leaving the index back above 7,000 for the first time in 16 months."

The FTSE rallied to a gain of 1.1 per cent at 7,060.46 points in early deals compared with Monday's close.

In the eurozone, Frankfurt's DAX 30 stocks index won 0.6 percent to 10,577.94 points compared with Friday's close. The DAX was shut Monday owing to a public holiday in Germany.

The Paris CAC 40 meanwhile opened Tuesday with a gain of 0.7 per cent at 4,485.41.

British Prime Minister Theresa May announced at the weekend that her government would start the process of leaving the EU within the next six months - possibly leading to Britain severing ties with the single market. </s> BRUSSELS (dpa-AFX) - The pound erased its early losses against its major counterparts and drifted higher in pre-European trading on Wednesday, as investor concerns over a 'hard Brexit' eased after the U.K. Prime Minister Theresa May has allowed the call to let the U.K. Parliament to decide on the Brexit strategy.



Bloomberg reported that May has accepted the motion from the opposition Labour Party calling for a 'full and transparent debate on the government's plan for leaving the EU.'



The U.K. Parliament will debate a motion that enable the MPs to 'properly scrutinise that plan' before triggering Article 50, the formal mechanism of withdrawing from the European Union.



Late Tuesday, May approved an amendment that effectively accepted the motion, while suggesting that the government will reject any attempt to block Brexit or 'undermine the negotiating position of the government'.



The currency declined on Tuesday as a media report showed that the British government could lose as much as GBP 66 billion per year in tax revenues and see its GDP slashed by up to 9.5 percent due to impact of a 'hard Brexit.' It declined 1.3 percent against the Swiss franc, 2.05 percent against the yen, 1.9 percent against the greenback and 1.19 percent against the euro for the day.



Reversing from an early low of 1.2105 against the greenback, the pound advanced to 1.2325 and held steady thereafter. The pound is likely to find upside target around the 1.28 mark.



The pound, having fallen to 125.30 against the yen at 5:30 pm ET, reversed direction and climbed to 127.56. The next possible upside target for the pound is seen around the 132.00 zone.



Bank of Japan policymaker Yutaka Harada said that negative interest rate policy is unlikely to hurt banks' business conditions and deteriorate the economy, and the central bank should take additional easing measures when needed without hesitation. 



'It is unlikely that in the current situation the negative interest rate policy would affect financial institutions' business conditions and deteriorate the economy as a whole,' Harada said in a speech to business leaders in Nagano.



The pound advanced to a 5-day high of 0.8967 against the euro and a 2-day high of 1.2180 against the Swiss franc, off its lows of 0.9127 and 1.1966, respectively hit at 5:30 pm ET. Continuation of the pound's uptrend may see it finding resistance around 0.87 against the euro and 1.26 against the franc.



Looking ahead, Switzerland's ZEW survey for October and Eurozone industrial production for August are due shortly.



Federal Reserve Bank of New York President William Dudley speaks at the Fireside Chat with the Business Council of New York in Albany at 8:00 am ET.



Kanas City Fed President Esther George will speak at the Federal Reserve Bank of Chicago's Annual Payments Symposium at 9:40 am ET.



At 2:00 pm ET, the Federal Reserve releases minutes of September policy meeting.



Copyright RTT News/dpa-AFX </s> Britain’s pound slumped to a three-decade low on Tuesday as its Brexit worries were compounded by a revitalized dollar, boosted by resurgent U.S. interest rate hike expectations.

Sterling dropped to its weakest since 1985, hit by a growing sense that the UK may be heading for a ‘hard’ Brexit where it severs links to the EU’s single market in favour of total control over immigration.

Robust construction data couldn’t prevent another 0.5 per cent fall for the pound as it extended Monday’s heavy tumble to wallow at $1.2764 and a three-year low of 87.51 pence per euro.

“It is now abundantly clear that access to the single market is not on (UK Prime Minister) Theresa May’s list of top priorities and the market is realizing that... there is more pressure for the pound in the weeks and months ahead,” said UniCredit’s Global Head of FX Strategy, Vasileios Gkionakis.

London’s FTSE cheered the idea of a weaker pound boosting firms’ exports though as it rose 1 per cent. Europe’s bourses all rose, with a 3.2 per cent jump from embattled Deutsche Bank also helping the mood.

Asian shares had finished higher too. Japan’s Nikkei leading the way with a 0.8 per cent gain after an upbeat U.S. manufacturing survey bolstered the dollar and lowered the yen.

Royal Bank of Canada said the data was helping stabilize its economic surprise index after a two-month run of negative surprises. Futures markets are now pricing in a more than 60 per cent chance the Fed inches up U.S. interest rates before the end of the year.

The dollar index, which tracks the currency against a basket of six major peers, hit a near 2-week high as it added 0.3 per cent to 95.970. It was last at 102.495 yen and worth $1.1171 per euro.

The main economic indicator this week is Friday’s non-farm payrolls report. Employers are expected to have added 170,000 jobs in September, according to the median estimate of 59 economists polled by Reuters.

Bond markets were mixed, with U.S. Treasuries steady at 1.62 per cent after two days of rises, UK Gilt yields nudging up to 0.75 per cent and southern euro zone yields squeezed higher as Italy announced it was selling its first 50-year bond.

Among commodities, crude oil futures took a breather following sharp gains overnight as Iran urged other oil producers to join OPEC in supporting the market.

U.S. crude was down 0.6 per cent at $48.52 a barrel after closing up 1.2 per cent on Monday. Brent was down 0.4 per cent at $50.68 after gaining 1.4 per cent overnight.

Gold fell to its lowest in over two weeks meanwhile, as the dollar’s strength dulled its appeal, leaving it as low as $1,307.15.

“Despite the fact that we saw different types of crisis from Deutsche Bank to Brexit, we can see that prices haven’t gone beyond the resistance at $1,350,” said Mark To, head of research at Hong Kong’s Wing Fung Financial Group.

“It is a pessimistic sign that even the speculators could not capitalize on the so-called bad news.”

Elsewhere, Australia’s dollar barely budged and its main share market ended 0.1 per cent higher after Australia’s central bank kept its main interest rate at 1.5 per cent after cuts in May and August.

“We think the case for no more cuts is strengthening,” said Paul Bloxham, chief economist Australia at HSBC. “Economic growth is strong, commodity prices have risen, and the drag from the mining investment decline is set to fade.” </s> Sterling plunged to a new 31-year low against the dollar on Tuesday as fears over a so-called "hard Brexit" intensified.

The pound fell 0.5% against the greenback in morning trading to 1.276 US dollars, its lowest level since 1985. Sterling was also down 0.2% against the euro at 1.14.

Investors have been spooked by a series of announcements at the Conservative Party conference, where Theresa May said the two-year process of negotiating Brexit under Article 50 of the EU treaties will start by the end of March, putting the UK on course for a "hard Brexit".

This would see Britain lose access to the European single market as part of plans to clamp down on immigration.

Kathleen Brooks, research director at Forex.com and City Index, said: "The Tory Party conference is turning into a sell for the pound, as foreign exchange traders get spooked by May's apparent sanguine attitude to leaving the single market, preferring to focus on immigration and UK sovereignty rather than the economic fallout of Brexit."

Ms Brooks also said Chancellor Philip Hammond's comments, in which he warned that Britain's economy is heading for a "rollercoaster" ride over the coming years, had compounded the sterling sell-off.

"Phillip Hammond, the UK's new Chancellor, didn't help the pound either when he suggested that George Osborne's fiscal rules will be abandoned and Government spending increased. This is designed to cushion some of the blow from the UK's departure from the European Union.

"However, it is likely to weigh on the UK's already large budget deficit, which is another blow to the pound at the start of the new quarter," she said. </s> Sterling slid to its weakest level in more than three decades against a dollar that was trading stronger across the board on Tuesday, hit by fears over the impact of Britain’s departure from the European Union.

The greenback reached a 13-day high against a basket of major currencies, helped by gains against the yen and by an upbeat survey of the US manufacturing sector that drove investors to increase their bets on a rise in US interest rates by the end of the year.

The pound had already shed more than 1 per cent the previous day on the back of British Prime Minister Theresa May’s announcement on Sunday that the formal process that will take Britain out of the EU will start by the end of March. It extended those falls on Tuesday, slipping more than half a per cent to $1.2757, its weakest since June 1985. That left it down 15 per cent since Britain’s June 23 referendum on EU membership. The euro was trading at £0.87478 early Tuesday morning, having hit three year lows on Monday.

Many in the market worry that the government’s stance points to a “hard Brexit”, in which Britain quits the single market in favour of retaining control over migration and which could drive an exodus of banks from London. “The headlines we’ve been seeing in the last few days...have been focusing the market’s attention on the big structural challenges that the UK is facing, particularly if it’s going to be ‘hard’ rather than a ‘soft’ Brexit,” said HSBC FX strategist Dominic Bunning, highlighting a report suggesting post-Brexit Britain would not be supportive of the financial sector.

Bunning said investors were worried that if Britain’s huge financial services industry takes a big hit from Brexit, that could help widen an already gaping current account deficit. While the turmoil in the days and weeks following the EU referendum spurred demand for safe-havens like the yen, analysts pointed out that the latest slide in the pound had yet to trigger similar reaction. </s> The FTSE 100 has hit a record high as the pound tumbled further on Brexit jitters.

The UK’s top-flight index reached 7,129.83 points in mid-session trading – beating its previous record intraday high of 7,122.74, set in April 2015.

Shares have been surging higher while sterling has taken a battering since the Brexit vote, as many of the listed multinational companies benefit from earnings in stronger foreign currencies.

Against the US dollar, sterling dropped more than 0.8 per cent to trade as low as $1.225 today. The pound also fell against the euro, down about 0.3 per cent to €1.106.

READ MORE: Pound falls to fresh 31-year low in ‘flash crash’

Since the Brexit vote on 23 June, the FTSE 100 has made a healthy recovery, jumping about 12.5 per cent, while sterling has slumped more than 18 per cent against the US dollar over the same period.

Sterling ducked even lower today after leaked government papers laid bare the cost of leaving the EU. Switching to World Trade Organisation rules would cause gross domestic product to fall by up to 9.5 per cent and cost the Treasury up to £66 billion a year, compared with if the country remained in the EU.

Connor Campbell, a financial analyst at SpreadEx, said the news has “thrown more fuel on the fearful fire…leaving the markets to deal with another day of sterling dread”.

He added: “With that in mind, the pound, of course, has woken up wheezing and spluttering, continuing to shed an amount of blood that is apt for a month ending with Halloween.”

Click here to ‘Like’ The Scotsman Business on Facebook </s> The pound endured another day of pressure from investors on Tuesday after continued jitters on the foreign exchange markets pushed it down more than two cents to $1.21. 



Sterling recorded its worst four-day performance since the Brexit vote as a Bank of England official said he expected the pound to fall further in the coming weeks, driven by the referendum result and the UK’s trade deficit with the rest of the world.

The exchange rate with the US dollar stood at $1.30 last week when Theresa May opened the Conservative party conference and appeared to put regaining control of immigration above staying inside the EU’s single market free trade area. Investors took fright at the prospect of a hard Brexit and the currency has declined more than 6% against the dollar since then.

A flash crash last Thursday, when the pound fell by 6% in 10 minutes, heightened concerns that investors had lost faith in sterling as a major currency. A year ago a pound bought $1.55.



However, the pound’s decline had the opposite effect on the UK’s leading share index. The FTSE 100 touched a new intra-day record of 7,129.83 during afternoon trading, although it closed nearly 60 points lower after a late bout of selling, below the record closing figure of 7,104 reached last year. The driving force for the UK market’s recent surge has been the rapid decline in the pound, which has boosted the value of companies that earn much of their revenues in dollars.

Michael Saunders, a former investment banker who joined the monetary policy committee (MPC) in August, said Britain’s large current account deficit was adding to the anxiety about the ability of the nation to pay its way once it quits the European Union.

Saunders said the current account, which measures the balance of trade, cash transfers and investment income with other countries, was already undermining confidence in the UK’s ability to pay its way before the EU referendum.

Speaking to MPs on the treasury select committee, Saunders warned it was now a major issue and compounding the already weak sentiment on currency markets towards sterling.

“Given the scale and persistence of the UK’s current account deficit, I would not be surprised if sterling falls further, but I am fairly agnostic as to whether any further depreciation is likely,” Saunders told MPs on the treasury select committee.



Saunders, who joined the MPC from the US investment bank Citi, where he was chief economist, said investors were weighing up the implications of Britain leaving the EU.



“The work done by the International Monetary Fund and the OECD suggests that the long-run effects of the UK’s exit from the EU is that growth will be lower. If all we are doing is adjusting to a new equilibrium, that is not a concern,” he said.

Only if the pound plummets or triggers falls in other markets would the Bank of England need to consider cutting rates to bolster confidence and growth, he added.

“If such a scenario were to materialise then, provided inflation expectations and pay growth remain well contained, I would expect the MPC to largely look through any such direct effects on inflation of sterling weakness, even if they extend for several years.”

But the lower pound, which reduces the cost of UK goods and services sold abroad, could boost exports and offset much of the anxiety caused by the Brexit vote.

A fall in imports would also help to reduce the current account deficit, he said, adding that the government could take advantage of the current depressed situation to boost growth with extra spending.

Several Tory MPs, including supporters of the leave campaign, have warned that leaving the single market will harm the economy and have demanded ministers make every effort to negotiate continued access.



But the hardline taken by Downing Street and an equally robust response from European leaders, who have emphasised the free movement of labour as a pillar of the single market, have heightened concerns in the City that Britain will eventually leave all the EU’s major institutions.

Kathleen Brooks, research director at financial betting firm City Index and Forex.com, says traders fear the UK could be dragged back by Brexit uncertainty.

She told BBC News that: “The weakness in the pound is really a sign that investors don’t have confidence in a post-Brexit UK economic outlook. They think Brexit is going to be very negative for the UK economy, and UK GDP could contract going forward.” </s> Sterling fell on Monday near a 31-year low against the dollar and to a three-year low versus the euro after a March deadline was set for the start of the formal process that will split Britain from the European Union.

The dollar, according to Reuters, strengthened against a basket of currencies on a private report that showed the U.S. manufacturing sector returned to expansion territory in September.

Among emerging markets, the Colombia peso tumbled as much as 3 percent against the greenback after voters on Sunday rejected a peace deal with Marxist FARC rebels, raising worries about the nation’s credit ratings and ability to embark on tax reforms.

In Britain, Prime Minister Theresa May told her Conservative party’s annual conference that she was determined to move on with Brexit and win the “right deal” in an effort to ease fears inside her party that she may delay the split with the EU.

“That caught the market by surprise with some people still hoping Brexit won’t happen,” said Mazen Issa, senior FX strategist at TD Securities in New York.

May’s Brexit comments came after the pound posted its worst run of quarterly losses since 1984.

The pound had dropped more than 1 percent against the dollar to as low as $1.2818 GBP=D4 before trimming losses in late U.S. trading. It was briefly less than half a cent away from the 31-year low it reached in early July, shortly after the June 23 vote to leave the EU. It was last down 0.9 percent at $1.2863.

Sterling also shed 0.7 percent against the euro at 87.18 pence after it hit 87.48 pence EURGBP=D4, its weakest since August 2013.

The greenback enjoyed a modest rise in light trading as some European and Asian markets were closed for holidays.

The dollar index was up 0.25 percent at 95.701 after the Institute for Supply Management said its barometer on U.S. factory activity rose to 51.5 in September, above the 49.4 in August and beating forecasts among economists polled by Reuters.

A reading above 50 indicates the manufacturing sector is growing.

While the overall ISM reading on factory activity was encouraging, it was not enough to raise expectations the U.S. economy is picking up steam.

“It’s not runaway support for the dollar,” TD’s Issa said.

Meanwhile, the Colombian peso tumbled to its weakest level against the dollar in two weeks after Sunday’s referendum rejected a peace deal between the government and FARC guerrillas.
Following the June 23 Brexit vote, the exchange rate for the British pound reaches a 31-year low against the United States dollar.