CURRENCIES: British Pound Collapses On No-deal Brexit Concerns
July 29 2019 - 10:39AM
Dow Jones News
By Steve Goldstein, MarketWatch
Sterling drops below $1.23 level and then makes a run toward
$1.22
The British pound nosedived to a fresh two-year low on Monday as
concerns about the country leaving the European Union without a
deal intensified amid moves by Prime Minister Boris Johnson in his
first few days in office.
The pound fell as low as $1.2212, from $1.2382 late Friday, as
Johnson and his new Cabinet made clear they were stepping up
preparations to leave the EU without a deal.
The pound also collapsed against the euro, fetching EUR1.0979 vs. EUR1.1128.
Selling intensified as New York traders started their day.
Johnson has declared that the withdrawal agreement negotiated
between the EU and former Prime Minister Theresa May is "dead"
unless the Irish border backstop is abolished. A Johnson
spokeswoman was quoted as saying he wouldn't even meet EU leaders
unless they agreed to change the withdrawal agreement.
Michael Gove, who is heading up the government's preparations
for a no-deal Brexit, wrote in the Sunday Times that the government
is working on the assumption of a no-deal Brexit
(https://www.thetimes.co.uk/article/michael-gove-no-deal-is-a-very-real-prospect-we-must-ensure-we-are-ready-0flpkxkc3).
Analysts at Citi said: "If the aim is to call and win an
election, early signs are that chances are improving, which
reinforces our base case of an election later this year or in early
2020. However, the Boris Johnson government's honeymoon period with
voters could be short-lived if the economy responds as negatively
to the no-deal talk as sterling and a 5 percentage point lead over
Labour is probably too narrow for comfort."
The Bank of England on Thursday is expected to drop from its
statement explaining its interest-rate decision its expectation of
"an ongoing tightening of monetary policy over the forecast
period." No interest-rate change is expected.
Meanwhile the Confederation of British Industry said in a new
report that neither the UK nor the EU were prepared for a no-deal
Brexit
(https://www.cbi.org.uk/media-centre/articles/neither-uk-nor-eu-ready-for-no-deal-contingency-planning-study-finds/).
(END) Dow Jones Newswires
July 29, 2019 11:24 ET (15:24 GMT)
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