Sterling tanked to five-month lows on Thursday, weighed down by worsening market turmoil after U.S. President Donald Trump slapped restrictions on travel from Europe and European Central Bank stimulus measures fell short of expectations.
The British currency received a short-lived boost on Wednesday when investors welcomed stimulus measures from the Bank of England and the British government, including an interest rate cut and billions of pounds of support for struggling firms.
But the pound has since tumbled, first following Trump’s flight ban and then again as investors scrambled for dollars following the European Central Bank’s decision to keep interest rates on hold.
The U.S. flight ban exempts Britain but has been seen as a sign of an escalating crisis.
The ECB announcement caused the euro to fall and the dollar to rise as traders rushed to buy the most liquid currency, which tends to do well during market panics.
Sterling slid 1.8% to $1.2584, its weakest since October. The pound also fell to 89.12 pence per euro, its lowest level against the single currency since October.
Source : Reuters