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Pound falls to 27-month low as no deal Brexit fears persist

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
Prime Ministerial hopefuls Boris Johnson and Jeremy Hunt have both hardened their rhetoric on a no deal Brexit. Photo: Louis Wood - WPA Pool/Getty Images

The pound has fallen to its lowest level against the dollar since April 2017 as fears continue to rise about the possibility of a no deal Brexit.

Sterling was down 0.6% against the dollar to $1.24 ( GBPUSD=X ) at 1.15pm UK time. The pound was down by 0.3% against the euro to €1.10 ( GBPEUR=X ) at the same time.

The slump has seen the pound fall below the level it hit against the dollar in January 2019 when it suffered a “flash crash.” Sterling is now trading at at 27-month low against the dollar and a six-month low against the euro.

The pound has been sliding against the dollar across Tuesday. Photo: Yahoo Finance UK

There is no obvious spur for the pound’s drop on Tuesday, but analysts pointed to continue fears about a possible no deal Brexit.

“Both Conservative leadership candidates are taking the hard line on Brexit to appeal to the Tory membership,” said Neil Wilson, the chief market analyst at Markets.com.

Jeremy Hunt and Boris Johnson, who are both in the running to be the next UK Prime Minister, struck hard lines on Brexit during a leadership debate on Monday.

Both Hunt and Johnson talked about removing the Irish backstop from the Brexit withdrawal agreement, which would likely anger the EU and destroy the deal. Former attorney general Dominic Grieve told the BBC on Tuesday he thought the comments were “significant” and signalled no deal was becoming more likely.

Nick Macpherson, a former senior civil servant at the UK Treasury, said on Twitter that “the two candidates to be our next PM seem determined to debauch the £ [pound]” .

David Cheetham, the chief market analyst at trading platform XTB, said: “The currency has been in a persistent downtrend for the past couple of months with last week’s depreciation against the Euro making it 10 consecutive weekly declines and the longest such run on record.

“What is worth noting about the drop is the slow and steady nature of it, with no real sharp moves just a persistent move lower. This reflects the lack of any new obvious negative catalysts and more shows the continued headwinds to the currency due to the ongoing political uncertainty.”

The fall in the pound came despite positive UK labour market data earlier in the day that showed wages growing at their fastest pace in over a decade and employment levels remaining close to record highs.

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Oscar Williams-Grut covers banking, fintech, and finance for Yahoo Finance UK. Follow him on Twitter at @OscarWGrut .

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