Sterling fell further overnight to its lowest level since March 2017 as worries over a no-deal Brexit under Boris Johnson’s government deepened.
The pound plunged below $1.22 to hit $1.2146 this morning, a drop of almost 0.6 per cent against the dollar as analysts warned GBP is coming close to “uncharted waters”.
Against the euro, sterling also dropped 0.5 per cent to buy just €1.091.
“Sterling is under relentless selling pressure,” Markets.com chief analyst Neil Wilson said. “This is a key test, forming the lows of Mar 2017. Next stop is 1.2040 - if that blows then we’re into new territory sub $1.20 and it’s anyone’s guess where cable could land.
“Remember the previous post-2016 low was before no-deal was on the table – it was all talk of a hard versus soft Brexit – no deal wasn’t even being discussed.
The pound has lost around 2.4 per cent of its value since Johnson became Prime Minister last week.
Since his arrival in 10 Downing Street, Johnson has pivoted firmly towards a no-deal Brexit, making this his main target.
That would mean the UK would leave the EU regardless of whether or not a deal is brokered by the current departure date of 31 October.
Speaking in Scotland yesterday, Johnson reiterated his rejection of the withdrawal agreement secured by former Prime Minister Theresa May.
Her deal contains a so-called Irish backstop to avoid a hard border in Ireland, but which MPs fear could tie the UK indefinitely into an EU customs union.
“We can’t accept the backstop, it was thrown out three times [by parliament], the withdrawal agreement as it stands is dead and everybody gets that,” Johnson said.
“But there is ample scope to do a new deal and a better deal.”