British pound in freefall

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The British pound continued its downward spiral today, falling to a fresh 31 year low as political uncertainty after the Brexit vote added another headache for the local economy.

At 8.44am (GMT) the Pound was trading at US$1.2976c after reaching a low of US$1.2796c earlier in the trading session.

With the leadership of the British government in limbo, investors are feeling nervous about investing into the economy which is leading to even less demand for the British currency.

"You're not going to make a big investment decision if you don't have that sort of certainty," said Axel Merk, chief investment officer at Merk Investments.

He also noted that even if the Bank of England steps in to help the situation it won’t matter much if nobody is interested,

 "The only thing the Bank of England can do obviously is provide the ability of banks to lend, but if there are no takers, it doesn't help all that much." Mr Merk added.

 Predicting even further downside for the pound in the nearest future is Ray Attrill, co-head of foreign-exchange strategy at National Australia Bank who noted that the problems facing the British economy are going to continue,

"We still think that $1.20 is a not unreasonable target given the size of effective like terms of trade shock," he said. "It's like Australia running out of gas or Saudi Arabia running out of oil, particularly in terms of how the financial services sector is potentially going to be impacted." he said.

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