Why did the pound hit a new 28-month low?

[Mark Michaels]

[Kyle Rodgers]

The pound tumbled to a new three-year low this morning as investors got concerned about the escalation of the no-deal rhetoric by Boris Johnson’s government regarding Brexit. Sterling dropped to lows of $1.21 against the US dollar, and below €1.09 against the EUR on the market today, as cabinet ministers have been meeting and making preparations for a no-deal outcome. Michael Gove, the Chancellor of the Duchy of Lancaster and the main person responsible for no-deal Brexit preparations, said the British Government is "working on the assumption" of the no-deal outcome. Gove said he still wants to reach an agreement with Brussels, but in an interview with the Sunday Times, he added: "No deal is now a very real prospect." Petr Krpata, an FX strategist at ING Group, believes that an early election might happen and in that case, the pound will plummet as low as €1.05 against the euro and $1.18 against the dollar.