Investors were expecting a weak sterling to revive the country’s exports, but those expectations failed to materialise Larry Hatheway from UBS is very bearish on sterling, expecting the currency to fetch $1.3500 by the end of the year. That’s almost a 7% decrease on the current price of $1.4500. At its first cabinet meeting on Thursday, the new government pledged to accelerate deficit reduction. It has vowed to implement spending cuts worth 6 billion pounds this year, but details remain vague.

“There are problems in the euro zone and the fiscal restraints will hurt growth, and the UK will need to do the same,” said Geoffrey Yu, currency strategist at UBS.