UPDATE 3-Pound hits 31-year low on "hard" Brexit worries while stocks soar

martes 4 de octubre de 2016 10:48 GYT
 

(Adds fund manager quote, details)

By Anirban Nag and Kit Rees

LONDON Oct 4 (Reuters) - Sterling slid to its lowest in more than three decades on Tuesday on fears of a "hard Brexit" from the European Union and its single market that could hurt the economy, although the weaker pound sent UK stocks surging.

The pound has already lost 1.7 percent against the U.S. dollar since Prime Minister Theresa May said on Sunday the formal process to take Britain out of the EU will start by the end of March 2017. On Tuesday, she added the divorce from the EU will not be "plain sailing" and that there would be "bumps in the road".

Many economists and investors fear May's government will back a "hard Brexit" option where Britain quits the single market in favour of imposing controls on immigration.

That could hinder inward and outward trade and constrict the foreign investment needed to fund Britain's huge current account deficit, one of the biggest in the developed world.

Economic activity has held up better than many had expected since Britons voted in a June referendum to leave the EU, but many policymakers are anxious about the prospects for future investment. The Bank of England launched a big stimulus package in August and may ease policy again in coming months, which could drag the pound still lower.

"Most of the key (BoE) members have expressed a willingness to continue acting pre-emptively ... and an expectation that more easing is likely to be necessary," UBS strategist John Wraith said.

"Additional stimulus would likely drive further sterling weakness," he said, reiterating the bank's forecast for $1.20 per pound and parity with the euro by end-2017.   Continuación...