Wednesday 7 August 2019 12:52 pm

Sterling resumes fall as Brexit debate takes bizarre turn

Sterling has resumed its fall against the dollar on no-deal Brexit fears as the Queen was dragged into the acrimonious debate about Britain crashing out of the European Union.

Read more: Dominic Cummings squares off over Dominic Grieve’s Brexit threat

The pound had fallen 0.2 per cent against the dollar by 12.50pm UK time to $1.214, and had dropped 0.2 per cent against the euro to €1.085.

The fall means the UK’s currency has shed over 2.5 per cent against the dollar since Boris Johnson became Prime Minister on 24 July.

Traders are increasingly worried that Britain will leave the EU without a deal on 31 October as Johnson’s government ramps up no-deal preparations.

A new front opened in the Brexit debate yesterday when MP and former attorney general Dominic Grieve, a vocal opponent of no deal, told the Times that the Queen would have a “responsibility” to act if Johnson refused to step down following a no-confidence vote.

Such a vote could be called by Labour and supported by frustrated Remain MPs in a bid to block a no-deal exit.

Yet Dominic Cummings, Johnson’s new chief adviser, poured scorn on the idea, saying of Grieve to Sky News: “We’ll see what he’s right about.”

Craig Erlam, senior market analyst at foreign exchange firm Oanda, said: “The declines we’re seeing in sterling today are relatively small compared to what we’ve become accustomed to.” 

“What’s interesting is that we’re not seeing it rebound much at all, despite having suffered significant losses in recent months.”

“It may be summer recess but the no-deal rhetoric from Johnson and his team isn’t going anywhere, which may maintain the pressure on the currency.”

Sterling’s fall has boosted the FTSE 100, however, which was 0.7 per cent up by 12.50pm UK time.

Read more: MPs launch legal action to prevent no-deal Brexit

European markets have risen today after US President Donald Trump played down the prospects of a long and protracted trade war with China.