The pound slumped to a 35-year low against the US dollar as markets were left unconvinced at the UK’s emergency £350bn financial package to combat the coronavirus.
Sterling was down by as much as 2.53 per cent against the dollar, with one pound buying only $1.17, the lowest amount since 1985 when the US deliberately devalued its currency.
Analysts said that rather than a falling pound this story maybe about a rising dollar.
“In a crisis like this, king dollar reigns supreme,” said Neil Wilson, chief market analyst at Markets.com.The euro was down against the dollar, but only made half the losses that sterling racked up (Photo: JOHANNES EISELE/AFP/Getty)
Ranko Berich at Monex Europe, a foreign exchange firm, said: “Idiosyncratic factors such as the UK’s monetary and fiscal response or Brexit are beside the point: this is about the US dollar, which is proving unstoppable as global financial markets stare into the abyss of crisis-like conditions.”
The euro was down against the dollar, but only made half the losses that sterling racked up.
FTSE 100 suffers
On the stock market, the FTSE 100 had another bad day, falling 4 per cent to 5,080.58 points.
David Madden, market analyst at CMC Markets UK, said: “The stimulus packages from yesterday have done little to reassure the markets as panic selling was witnessed.
“Governments announced packages to help combat the crisis, but they won’t kick in for a while, and there is the possibility they won’t be enough to stop a major slowdown in economic activity.”Read MoreCoronavirus may prompt a rethink of sick leave that encourages being considerate, not present
In the US the Dow Jones plunged again setting off alarms designed to stop shares from crashing that automatically halt trading.
US shares closed down 1,300 points, or 6.3%, erasing nearly all of the gains made since President Trump’s inauguration.
Major European markets also closed down. The German Dax sunk 5.56 per cent, while the French Cac dropped 5.94 per cent lower.
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