Pound's decline deepens as currency reclaims dubious honour

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London - Just 10 days into the New Year, the pound has already established a firm grip on its 2016 position as the worst-performing Group-of-10 currency.

Sterling dropped to the lowest level versus the dollar since October on Tuesday amid concern the UK is heading for a exit from the European Union that prioritizes curbing immigration over single-market membership. That’s left analysts braced for another volatile 12 months, with HSBC Holdings strategists predicting that the pound may drop to as low as $1.10 if the most severe exit option is pursued.

"Currencies are now the main bellwether of political events," HSBC strategists David Bloom, Daragh Maher and Dominic Bunning, wrote in a note to clients.

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