Tatler-Cox: Pound Drifts Lower On 'Hard Brexit' Concerns

Tatler-Cox: A week after plunging to 31-year lows, the British Pound continues to drift lower on fallout from Brexit.
Tatler Cox: Lingering concerns over the British government's approach to the process of leaving the European Union continued to weigh on sterling with the currency drifting below $1.2300 to the US dollar and plumbing new lows against the euro.
The gradual wearing down of the pound follows a so-called "flash crash" last week when it plunged to as low as $1.13 in Asian trading before recovering to $1.25 where it remained range bound as traders tried to make sense of the precipitous fall.
Recent comments by British Prime Minister, Theresa May and remarks made by French President, Francois Hollande turned investors bearish on the already pressurized currency with many fearing that the terms under which the UK eventually leaves the EU will have a particularly negative impact on the country's economy.
"Much of sterling's fall has its roots in the effect of Britain's mode of exit from the EU but there is also a contribution from an unusually strong dollar which is being buoyed by the prospect of an interest rate increase at the Federal Reserve's December meeting," said Mayla Yakumi, Chief Investment Officer at Tatler-Cox.
"The dearth of faith in sterling right now is leading to increasingly bearish sentiment and, in the absence of any good news from the UK and the already high expectations of a Fed rate hike, there's very little to draw a line under it."
Tatler-Cox has told clients invested in British companies that generate significant portions of their income from abroad to continue to hold on to them citing the prospect of further falls in sterling and corresponding increases in those companies' share prices.