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Pound hits post-Brexit low versus US dollar

Sky News logo Sky News 12/01/2017
The pound's value has collapsed against the dollar © Getty The pound's value has collapsed against the dollar

The pound has hit its lowest level against the dollar since the UK voted to leave the EU, amid a sudden strengthening of the US currency.

Sterling dipped below its post-Brexit low of $1.2081, if the trading blip caused by a so-called 'flash crash' is omitted, as US President-elect Donald Trump prepared to give his first news conference since November's election.

But it later recovered some poise back above $1.21 as the billionairetook questions from reporters in what proved to be a fiery occasion. It settled higher than $1.22, leaving it up against the greenback on the session opening.

Sterling has had a horror show of a week - losing ground at the start of trading on Monday following remarks by PM Theresa May on Sky News that were interpreted as adding to the likelihood of a 'hard Brexit'.

A worse than expected widening of the UK's trade deficit on Wednesday also saw the pound come under further pressure.

The pound's closing price against the dollar since June © Other The pound's closing price against the dollar since June

The British Chambers of Commerce said the figures confirmed "there is little evidence that the fall in the value of the pound is boosting the UK's overall trade balance".

Exports are usually lifted by a fall in the pound as it makes goods cheaper for overseas customers.

The pound's value, since 24 June last year, has largely been determined by signals linked to the UK's negotiating position ahead of the looming divorce from the EU.

Investors are wary of any hint that the country is to leave the EU single market so it can have full control over its borders.

Its weakness is exacerbated by the relative strength of the dollar, as the United States raises interest rates amid an improving economic picture.

Neil Wilson, senior market analyst at ETX Capital, monitored sterling's latest dip on Wednesday afternoon.

As it languished, he wrote: "The pound just slid again, slipping below $1.21 to rock fresh lows around the $1.2038 handle.

"The move looks dollar-driven with the buck heavy bid at day highs across the board ahead of Donald Trump's news conference."

He also noted it coincided with a rise in the value of the FTSE 100, which closed the day at a new high of 7290 - its tenth successive bounce into uncharted territory.

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