Sterling dips to another record low against Sing Dollar

SINGAPORE – The British pound continued its slide to reach a new low against the Singapore dollar on Friday (July 1), hitting S$1.7838 at 8.05pm, according to Bloomberg data.

Since Britain voted to leave the European Union last week, the pound has been falling against the Sing dollar.

The pound’s decline on Friday took place after the Bank of England Governor Mark Carney said that the central bank may need to loosen monetary policy as it tries to contain the fallout from Britain’s decision to quit the European Union. That halted a two-day rally in sterling, and left it more than 10 percent lower since polls closed on June 23.

While that is a sign of a lack of confidence in the United Kingdom’s post-vote economy, a weaker currency may help cushion the effect of Brexit. Central bank action, designed to further insulate the UK, may be necessary within months, Mr Carney said in his second televised address since the country voted to leave the trading and political bloc.

“The comments clearly signal that the Bank of England has decided to loosen monetary policy to support growth,” said Mr Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “And it will look through a temporary period of higher inflation resulting from a sharp decline in the pound. BOE easing will reinforce the weakening trend for the pound.”

The currency had already tumbled after the June 23 referendum plunged the country into political and market turmoil, leading to the resignation of Prime Minister David Cameron. The Conservatives are in the process of choosing a leader who will have the task of negotiating the terms of Brexit.

The pound’s decline does have some benefit for the UK economy because it makes exports cheaper to buy with other currencies. It has already helped the FTSE 100 Index recover from its post-Brexit slump, with the gauge closing Thursday at its highest level since August. (WITH BLOOMBERG)