Pound sterling hits a new 31-year low against the dollar

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The pound has tumbled to a new 31-year low against the dollar with the US currency boosted ahead of President-elect Donald Trump's press conference.

Mr Trump gave his first formal media briefing since winning the US election on Wednesday, with investors eager to get more details on his policy framework.

Jane Foley, head of currency strategy at Rabobank, said that the dollar is rising because the “market is hoping for a bit more meat on the bones” in relation to Mr Trump’s financial policies.

Sterling dropped as low as $1.2039 before rebounding slightly to just above $1.21 by the time the London market closed.

This is a more than three-decade low for the currency, excluding the flash crash on October 7 that sent the pound plunging more than 6 per cent to $1.18.

Benjamin Mandel, a strategist at JP Morgan Asset Management, said on Wednesday that “Trumponomics is likely to prop up growth and reduce recession risk” which in turn will “act as a near-term positive for the US economy”.

Ms Foley also said that in parallel to the dollar move, the pound is coming under consistent pressure as result of the lingering uncertainty around Brexit.

In her New Year TV interview on Sunday, Prime Minister Theresa May said Britain will not attempt to cling on to “bits of EU membership”.

Fears among currency traders and investors that the UK is heading for a hard Brexit – in which access to Europe’s single market would be sacrificed in favour of tighter controls over immigration – have tended to weaken the pound while suggestions that the UK could retain access to the EU single market have helped it to recover.

The pound is likely to drop around 5 per cent to $1.15 against the dollar after Ms May triggers Article 50 in March, starting the two-year countdown to leaving the EU, according to a Reuters poll of more than 60 foreign exchange strategists.