Pound crashes to lowest level against the dollar since 1985
THE pound has crashed to its lowest level against the US dollar since 1985 as the coronavirus crisis continues.
It's the seventh day in a row of falls for the pound, which started as the Bank of England slashed the base interest rate to 0.25 per cent last Wednesday.
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At the time of writing at 4pm, £1 will buy you about $1.1764- its worst rate in more than 30 years.
Back in 1985, the pound's poor performance against its US counterpart was not due to volatility in the UK currency but because of a strong dollar.
The pound is performing better against the euro, as £1 will currently buy you about €1.0852.
The crash comes as the coronavirus has quickly spread across the globe, currently with more than 199,000 confirmed cases worldwide.
So far, there are 1,950 infected people across the UK, while 71 Brits have died from the illness.
Andrew Bailey, the new governor of Bank of England, said he'd noted sterling's crash and would consider the effects at the next monetary policy committee meeting.
Ian Strafford-Taylor, chief executive of Equals, said: "The global pandemic of the coronavirus along with the government's response and the market's reaction has left the pound incredibly vulnerable."
"Combined with travel bans, country lockdowns and mass flight cancellations, holidaymakers are struggling to know which way to turn.
"People who have had to postpone their holiday or had their trip cancelled, could hold onto their travel money until they are able to rebook, or if it’s loaded onto a prepaid card, they could use it while on home soil."
"It’s a very uncertain time for the pound, so if you do need to change your travel money back into pounds, you should shop around to find the best buy-back rate."
Jeremy Thomson Cook, chief economist at Equals, added: "Nobody knows which economy will weather this crisis better than others but bets against sterling show that markets think that we are running this race with our legs tied together and with a bag over our heads.
"The joined up thinking from the Bank of England and Treasury is welcome but, until the support starts being paid into businesses accounts, it’s a case of actions speaking louder than words."
Phil McHugh, chief market analyst at Currencies Direct, said: "The pound has been hung out to dry as the insatiable appetite for US dollars continues as a liquid funding currency.
"Looking ahead there does not seem to be any positives for the pound to grip onto as it slides.
"Further action by the Bank of England looks likely in the short term to help support the economy, but this will lead to a further fall in UK yields supressing the investor flows that are supportive of the pound."
The FTSE 100 index has also had a turbulent time recently, plunging 11 per cent in the worst day of trading since Black Monday in 1987.
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The crash, which was the second worst ever surpassing the drawn out drop of the financial crash in 2008, wiped £160billion off shares of Britain's biggest companies.
The index then went up 7 per cent the following day as Boris Johnson stepped up his battle plan to delay the spread of the disease.
We take a look at how the coronavirus compares to previous market crashes of 1987 and 2008 when the financial crash began.