LONDON”•The pound slumped to a 31-year low against the dollar Tuesday on concerns over the timing of Britain’s planned exit from the European Union, according to traders.
Britain’s currency also struck a fresh three-year low point against the euro, while the drops helped pushed London’s benchmark FTSE 100 stocks index up to a 16-month high beyond 7,000 points at the open.
Around 0725 GMT, the pound struck $1.2757″•the lowest level since 1985.
Sterling meanwhile traded at 87.56 pence to the euro”•its weakest level since 2013.
“It seems that it is going to be hard to provide a tourniquet for sterling’s recent wounds given the solidity of the newly announced Brexit timeline,” said Connor Campbell, analyst at traders Spreadex.
“In terms of silver linings the pound’s protracted demise has continued to lift the multinationals that make up the FTSE 100, leaving the index back above 7,000 for the first time in 16 months.”
The FTSE rallied to a gain of 1.1 percent at 7,060.46 points in early deals compared with Monday’s close.
In the eurozone, Frankfurt’s DAX 30 stocks index won 0.6 percent to 10,577.94 points compared with Friday’s close. The DAX was shut Monday owing to a public holiday in Germany.
The Paris CAC 40 meanwhile opened Tuesday with a gain of 0.7 percent at 4,485.41.
British Prime Minister Theresa May announced at the weekend that her government would start the process of leaving the EU within the next six months”•possibly leading to Britain severing ties with the single market.
Finance minister Philip Hammond said during the Conservative Party conference in Birmingham, central England, that people should expect “some turbulence as we go through this negotiating process.”
Hammond, who like May campaigned for Britain to stay in the EU, said that consumer and business confidence could go up and down like a “roller coaster.”
His comments came the day after May revealed when Britain would start the two-year exit process, putting it on track to leave by early 2019 and opening the door for painful negotiations with EU partners.
The new premier, who took power in July after David Cameron quit following the Brexit vote, also indicated willingness to leave the single market in order to secure control over immigration from the EU.
EU states have signaled they will take a tough line and not offer Britain any special treatment in the talks, warning that membership of the single market would entail allowing freedom of movement.
European Commission president Jean-Claude Juncker’s spokesman told a daily briefing on Monday that Juncker he and May would discuss Brexit on the sidelines of an EU summit later this month.
But he added: “When it comes to article 50 we will work constructively on the basis of the notification, not of the speech, and until this letter arrives there will be no negotiation”.
Investors have begun outlining their concerns.
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