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Pound Falls To 5 Month Lows

The British Pound fell to a 5-month low this morning as investors continued to fear the possibility of a no-deal Brexit should Boris Johnson win the Conservative party leadership race.

Against the euro the British currency fell 0.2%, to its weakest level since Jan. 11. Sterling has now lost 5% of its value versus the single currency since the start of May, although losses during the last week have partly come as a result of broad euro strength.

Versus the dollar, the pound is down 0.6% for the week.

Investors have been reluctant to take big positions in the pound amid the Conservative party leadership contest, which should end with a new prime minister in place by the end of July.

Johnson, the frontrunner, has said Britain will leave the European Union on Oct. 31 deal or no-deal, but he has also said there is only a one in a million chance of leaving without an agreement in place.

Sterling was unmoved by GDP data released this morning, which showed the British economy grew 0.5% in the first quarter, in line with expectations.

Some say that the pound is likely to remain under pressure until there is clarity around Brexit.

As long as a no-deal Brexit remains a possibility, that should keep the pound below the psychological 1.30 mark against the U.S. dollar.

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