The pound recovered marginally from hitting an eight-year low against the euro earlier this week, but analysts cautioned that more weakness was likely to be in store for the battered currency as Brexit uncertainty bruises the economy.
On Friday morning sterling was trading at about €1.0857 and $1.2803 having earlier in the week fallen to its lowest level against the euro since just after the financial crisis, and its lowest against the dollar in around two months - except for a brief “flash crash” in October.
Strategists said that investors and traders would likely largely be adopting a wait-and-see approach to currency markets over the next few days, as a major central banking conference kicks off in Jackson Hole, Wyoming, at which Federal Reserve Chairwoman Janet Yellen and European Central Bank president Mario Draghi are both expected to speak.
Over the longer term, however, many are still gloomy on the prospects for the pound.
"We have been quite bearish about the British pound for some time and I think this trend is justified given its worsening fundamentals such as a widening current account deficit," Thu Lan Nguyen, a currency strategist at Commerzbank said.
Economists at UniCredit wrote in a note to clients earlier this week that the “upward trend” in the euro’s value against the pound “is showing no signs of slowing down”.
Also earlier in the week, strategists at Morgan Stanley commented that the pound’s weakness “is no longer inspiring foreign buyers to come into the market”.
They said that they are more optimistic on many other currencies, including the otherwise weak US dollar, and that they think buying the euro against the pound is the most sensible trade at the moment.
Last week Morgan Stanley said that the pound would be worth less than the euro on official exchanges by early next year.
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Away from the official rates, the pound has already slipped well below parity at some airport exchanges. The walk-up rate that holidaymakers were getting at airports across parts of the UK this week was just over 80 cents to one pound.
Those pre-ordering currency from a bureau de change, however, were still able to secure a rate of above €1 to the pound.
