Pound slides under $1.26 for first time since January flash crash
Sterling tumbled below $1.26 on Thursday after the likelihood of a no-deal Brexit increased as Theresa May’s replacement looks likely to push for a hard exit from the European Union.
The pound fell by 0.3% on Thursday against the dollar to below $1.26, the first time the currency has slide under that level since the January 3 flash crash.
Sterling also weakened against the euro too, falling by 0.2% to €1.133 after Brussels chief Brexit negotiator Michel Barnier reiterated that Theresa May’s withdrawal agreement is not up for renegotiation.
No-deal Brexit more likely as PM candidates favour hard exit
Sterling suffered a major blow last week May announced she will leave Downing Street on June 7, with the currency falling further this week as her would-be successors look likely to favour a hard Brexit.
Conservative MPs vying to take May’s place are more inclined to pursue a no-deal Brexit after the party suffered significant losses to Nigel Farage’s Brexit Party in the recent EU elections.
As its stands, Boris Johnson remains the bookmakers’ favourite to enter Downing Street, with the MP previously stating that Britain should leave on October 31 with or without a deal in place.
On Wednesday, Johnson was informed that he must appear in court to face allegations that he lied to UK citizens about Brexit by London’s Westminster Magistrates’
Sterling falters amid ongoing political uncertainty
‘The move in the dollar preceded the move in sterling, so it may not be specific to sterling. That said, there was Corbyn’s comments about the referendum which maybe got the market excited,’ BNY Mellon strategist Neil Mellor told Reuters.
‘I think it’s just an uncertain environment for sterling and uncertainty is never good for a currency,’ he added.
The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.
Be ready to act on ECB opportunities
Learn how the ECB’s monetary policy announcements affect interest rates and price stability ahead of its next meeting in September 2020.
- How might the next meeting affect the markets?
- What are the key rate decisions to watch?
- Why is the Governing Council announcement important for traders?
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
