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Pound falls on Friday driven by hard Brexit fears


Simon Mugo

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Sterling reversed yesterday's gain today and fell against the US dollar as markets reacted to the possibility of a hard Brexit, despite a vote by the British Parliament yesterday blocking the incoming prime minister from forcing through a no-deal exit from the European Union.

Investors are worried that Boris Johnson, who is likely to succeed Theresa May, will push for Brexit regardless of whether a deal can be struck or not, given that most of his closest advisers are adamant in their quest to take the UK out of the EU by 31st October.

Economists at Berenberg wrote in a research note that: “By surrounding himself with hardliners, Johnson could find himself boxed into a hard Brexit with little room for manoeuvre.” The firm also set the probability of a hard Brexit at 40%.

The pound today fell to a low of $1.2519 against the US dollar, representing a 0.2% drop, while it lost 0.1% against the euro to trade at 89.89 pence against the single currency during early trading in London.

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