Cable has fallen below 1.3000 for the first
time since June 1985 in early Asian trading, hitting a low of 1.2950. The
selling is a continuation of the downtrend triggered by the continued fallout
from the UK’s vote to leave the European Union.
Yesterday saw a weak business confidence
poll released and a
dovish speech from Bank of England governor Mark Carney. The sense of
crisis was exacerbated by news that UK asset manager Standard Life had stopped
redemptions on its UK commercial property fund after large drawdowns by
investors – the move was copied by two other large asset managers.
One dealer spoken to in Asia says that stop
losses below 1.3000 helped drive the pound lower in early trading – there were
also reportedly GBP/JPY stops from Japanese retail investors. “We are –
literally – in uncharted territory here,” the dealer says. “The last time we
were down here the charts were created with paper and pen.
Technical analysts are seeing very little
in the way of support for the pound, especially in thin Asian market
conditions. “I’m concerned it may get out of hand when Asia really gets into
full swing, there is still quite a lot of
sterling sitting on the sidelines waiting to be sold.”
In June 1985 Cable fell to a low of 1.2560
before falling further in the coming months to a low under 1.0400 and with no
sign of any progress in the Brexit process investors are no doubt being further
unnerved by the hiatus and uncertainty.
It is not only the dollar that is the
beneficiary of the pound’s slump. In spite of the damage likely to be inflicted
upon its already ailing economy, the euro has risen to 0.8548 overnight it’s
highest level since October 2013.
Similarly, GBP/JPY fell under 131.00 for the
first time since November 2012.