Sterling sinks to four-month low as Brexit talks break down
UK currency now set for its worst week since February 2018
Analysis from UBS cautioned investors against making “strong directional trades” in sterling as political uncertainty persists. Photograph: iStock
Sterling dived to a four-month low on Friday after cross-party Brexit talks collapsed and concern grew about the impact prime minister Theresa May’s likely resignation would have on Britain’s EU divorce.
Mrs May has agreed to set out a timetable for her departure in early June. That raises the prospect of a Conservative leadership battle producing a more Eurosceptic British leader who could move Britain towards a no-deal Brexit, the worst case scenario for sterling.
“What we’re seeing is the market pricing in a higher probability of an exit without a deal,” Adam Cole, chief currency strategist at RBC Capital Markets, said.
Sterling was down for a tenth consecutive session, touching a four-month low of $1.2733 and falling 0.6 per cent against the euro to 87.61 pence, the lowest since February 15 th.
It is now set for its worst week since February 2018, and a further fall would make it one of the worst weeks in well over a year. – Reuters