Pound tumbles after hard Brexit fears resurface

Britain’s pound tumbled , erasing its post-election gains, after news that Prime Minister Boris Johnson planned to take a hard line in Brexit talks with the European Union dashed hopes of an end to Brexit uncertainty.

In his boldest move since winning a large majority in last Thursday’s election, Johnson will use the prospect of a Brexit cliff-edge at the end of 2020 to demand the EU give him a comprehensive free trade deal in less than 11 months.

The reaction in markets, which had hoped that a resounding election win for Johnson’s Conservative Party would end near-term Brexit uncertainty, was swift.

We have been warning against getting too optimistic on the pound in the run-up to the UK election and now that the contest is over we are turning negative on sterling again.

After Britain leaves the EU on Jan. 31, it enters a transition period in which it remains an EU member in all but name while both sides try to strike an agreement on their post-Brexit relationship.

Currency analysts say that markets did not appear to be pricing in increased chances of a hard Brexit, but the post-election Brexit optimism was over.

Some investors had thought that Johnson would use his majority in Parliament to adopt a more moderate approach towards Brexit negotiations.

Analysts say a comprehensive trade deal with the EU could take years, not months, to negotiate.

They added that for sterling, the economy’s prospects could play a greater role – starting with Thursday’s Bank of England policy meeting.

British factory output fell at the fastest pace in more than 10 years during the three months leading up to Johnson’s election victory, a survey on Tuesday showed, underscoring the economic challenge he faces.

Leave a Reply

Your email address will not be published. Required fields are marked *

What's Going On?

Currencies 4 You Ltd is a company registered in England and Wales (registered no. 06866898). Registered office: Regus House Victory Way Admirals Park, Crossway, Dartford, Kent, DA2 6QD. Currencies 4 You Ltd Payment and Foreign Currency Exchange Services are provided by Currency Cloud Limited, Equals Connect Limited and Ebury Partners UK Limited. Currency Cloud Limited. Registered in England No. 06323311. Registered Office: Stewardship Building 1st Floor, 12 Steward Street London E1 6FQ. The Currency Cloud Limited is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 for the issuing of electronic money. FCA registration number: 900199. Payment Services are provided by Equals Connect Limited, registered in England and Wales (registered no. 07131446). Registered Office: Vintners’ Place, 68 Upper Thames St, London, EC4V 3BJ. Equals Connect Limited are authorised by the Financial Conduct Authority to provide payment services (FRN: 671508). Currencies 4 You Ltd is partnered with Ebury Partners UK Limited as its Programme Mananger. Ebury Partners UK Limited are authorised and regulated by the Financial Conduct Authority as an Electronic Money Institution. (Reference Number 900797). Ebury Partners UK Ltd is registered with the information commissioners office with registration number: ZA345828. | Terms and Conditions | Privacy Statement | Careers