Pound slumps to new 31-year low against US dollar

The pound remained in post-Brexit freefall as it tumbled to a fresh 31-year low against the US dollar amid mounting fears over the impact of the vote to leave the EU.

Sterling slumped below 1.28 US dollars at one stage, more than 15% below levels seen on referendum day, while it also dropped against the euro, falling 1% below Tuesday’s closing figure to 1.16, its lowest level since 2013.

Concerns over a Brexit hit to the UK’s property sector saw housebuilding shares remain deep in the red on the London market, although the FTSE 100 Index lifted 24.3 points to 6570.3.

The pound’s continued descent has been attributed in part to concerns that Brexit may cause a crash in British commercial property value and hurt the wider economy.

M&G became the third fund manager to suspend trading in its property fund late on Tuesday, joining Aviva Investors and Standard Life after investors have rushed to pull out of UK commercial property.

The property woes added to warnings from the Bank of England that Brexit effects were already taking hold, as well as a slew of recent economic figures pointing to a sharp slowdown in growth.

A move by the Bank of England to help prop up the British economy on Tuesday, by relaxing rules for banks to boost lending by up to £150 billion, failed to halt the pound’s slide.

Michael Hewson, chief market analyst at CMC Markets UK, said: “Combined with a warning that some Brexit effects were already starting to crystallise and this week’s slowdown in recent economic data we’ve seen a bit of a domino effect in locally exposed sterling assets, as well as risky assets generally across the world.”