After a hasty attempt to stimulate the economy, the British pound has fallen to a whole new level of low, even dipping farther than its post-Brexit low.
The sterling is now 11.7% weaker than it was before Britain’s infamous referendum on leaving the European Union. At that point, the pound fell 9.1%. It’s being called the worst-performing currency this year.
The pound was flat against the dollar and euro mid-afternoon on Friday, at $1.2963 and €1.1626.
“While other central banks have been under-delivering on expectations for accommodation, the BOE hasn’t had the benefit of this luxury, forced to move in the opposite direction, exceeding stimulus expectations,” said Joel Kruger, FX Strategist at LMAX exchange, to International Business Times.
“This reflects the severity of the risk associated with this major event and likelihood the UK currency still isn’t ready to find a bottom just yet.”
This marks a historical shift for the sterling as over the last quarter of a century, it’s been lower only on a handful of days following the financial crisis, in 2008, 2009, and 2010. .
In an attempt to revitalize the pound, the Bank of England announced last Thursday that it would cut interest rates by 0.25% and restart its bond buying program. In a news conference, Bank of England Gov. Mark Carney said, “There is a clear case for stimulus, and stimulus now.”
As of now, analysts and investors are projecting the pound to continue to fall in the next coming months.
“The easing measures announced by the BOE last week read like textbook tools to weaken sterling,” Morgan Stanley, global financial services firm, said to the Wall Street Journal.
So far, Britain has not fully detached itself from the European Union. The process leading up to the EU exit will take approximately two years. Until then, Britain can still decide whether or not its decision is permanent.