Pound hits six-week lows on worsening Brexit talks outlook
The battered pound has sunk to its lowest level against the US dollar since July amid mounting concerns over Boris Johnson’s controversial plans to override parts of his Brexit deal with the EU.
Sterling’s woes ramped up as Mr Johnson faced angry MPs over his Brexit negotiation move at Prime Minister’s Questions, sending the pound plunging by another 2.1% to a six-week low of just under 1.29 US dollars.
The pound was also 1.7% lower at just under 1.10 euros amid accusations the Government would effectively break international law over plans to rewrite elements of the Brexit Withdrawal Agreement.
Sir Jonathan Jones, the head of the Government’s Legal Department, resigned on Tuesday reportedly amid a row with Downing Street over the plans.
And senior Conservatives have since warned the move risks undermining Britain’s standing and reputation as an upholder of international law.
Currency experts said the pound was also taking a hit amid concerns the worsening Brexit negotiations could see further action from the Bank of England.
Fawad Razaqzada, a market analyst at ThinkMarkets, said: “Investors bet the renewed Brexit uncertainty calls for more monetary action from the Bank of England.
“The uncertainty surrounding the UK-EU trade situation has raised the prospects of the UK ending the transition period without a deal in place.
“With time running out fast, some investors are becoming increasingly pessimistic that an agreement will be reached in time.”
Connor Campbell, at Spreadex, said the pound’s losses this week had wiped out “all of the spirited growth it managed over a Brexit-ignorant August”.
But UK blue chip shares were enjoying a boost from the weaker pound, with the FTSE 100 Index up 1%, ahead 56.7 points at 5,987.
Many firms in the top tier of stocks benefit from a falling pound as they make the bulk of their revenues overseas.