Wednesday 7 December 2016

Pound falls to weakest level against the euro since late 2013

Published 06/07/2016 | 02:30

Bank of England governor Mark Carney speaks during a news conference in London Picture: REUTERS/Dylan Martinez
Bank of England governor Mark Carney speaks during a news conference in London Picture: REUTERS/Dylan Martinez

The pound plunged to a two-and-a-half-year low against the euro and a 31-year low against the dollar yesterday as Bank of England governor Mark Carney warned of a period of economic adjustment and urged Britons to be prudent.

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And in another turbulent day for the financial and economic landscape in the UK, two more property funds halted trading as investors pulled their money amid fears of falling property values.

Aviva Investors, the fund arm of insurer Aviva, suspended its UK Property Trust, as did M&G, the fund-management arm of insurer Prudential.

This followed a similar move by Standard Life Investments on Monday.

The pound had earlier weakened on the back of comments from Mr Carney (inset), who said: "The UK has entered a period of uncertainty and significant economic adjustment."

A weaker pound is bad news for Irish exporters, as it makes it more expensive for them to sell their products into the UK market. It could also mean that retailers here lose out, as shoppers will travel to the North to stock up on groceries.

That issue has already been raised by the Department of Finance as potentially impacting upon VAT receipts later in the year.

John Moclair, head of Global Customer Group at Bank of Ireland, said that yesterday's Sterling slide stemmed from worries about the strength of the UK economy.

And he said that further weakening could occur.

"This will not be music to the ears of Irish exporters, many of whom are already suffering due to the reduced competitiveness of the euro and are now faced with an uncertain period where larger than usual currency moves can be expected," Mr Moclair said.

Earlier yesterday, Mr Carney had warned of the prospect of a material slowing in the UK economy.

In his third appearance in 12 days, as Britain's political establishment reels from the fallout of the vote to leave the European Union, Mr Carney said that the number of vulnerable households could increase due to a tougher economic outlook.

He also took steps that should make it easier for banks to lend and signalled that rate cuts or more quantitative easing could be in the offing this summer.

Irish Independent

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