As traders continue to digest the consequences of the United Kingdom’s vote to break away from the European Union, the British pound sterling-related exchange traded fund continues to plunge to new lows, with the cable slipping to a fresh 31-year low.
On Wednesday, the CurrencyShares British Pound Sterling Trust (NYSEArca: FXB), which tracks the British pound’s movement against the U.S. dollar, fell 0.8%. FXB is down 10.3% over the past month.
Related: As Bank of England Mulls Rate Cuts, More Pound Punishment Likely
Meanwhile, the pound was trading at $1.2918 Wednesday after dipping to a session low of $1.2798, its lowest since 1985.
The pound has declined to a three-decade low for the past two days on increased evidence the Brexit vote is weighing on confidence in Britain’s economy, Bloomberg reports.
For instance, Henderson Global Investors suspended a 3.9 billion pound, or $5 billion, property fund, Wednesday after money managers, including Aviva Investors and Standard Life Investments, sent a stream of redemption requests in the wake of the Brexit uncertainty.
Related: Analyzing How Global Markets are Grinding Higher
“One-and-a-half weeks after the referendum, we’re starting to see negative things starting to crystallize in the economy in the U.K.,” Richard Falkenhall, a strategist at SEB AB, told Bloomberg. “Considering the pace we’ve seen over the last couple of days, we could probably easily see $1.25 in cable before things settle.”
The “cable” is forex lingo for the exchange rate between the USD and the GBP.
[related_stories]As foreign investors continue to yank money out of the U.K. as a result of the Brexit uncertainty, the pound will continue to come under pressure.
“The problem we have here is risk sentiment,” Steven Saywell, global head of foreign-exchange strategy at BNP Paribas SA, told Bloomberg. Due to its current-account deficit, Britain “needs to attract funds in to balance its books. When the market starts to become nervous about that, those flows dry up,” hurting the pound.
Related: 10 ETFs Hit the Hardest in ‘Brexit’ Fallout
The pound has been the worst performing asset since the U.K.’s decision to leave the E.U., and the majority of analysts who’ve changed their forecasts since the referendum results are now projecting the currency to remain depressed.
For more information on the GBP, visit our British pound category.
CurrencyShares British Pound Sterling Trust