Investors sold off the pound on the first trading day after the UK officially left the EU, as fears about the outcome of the impending trade negotiations and an eventual no-deal Brexit resurfaced.
Sterling traded at $1.3058 from above $1.31 with UK prime minister Boris Johnson set to say that the country is ready to walk away from talks with the EU without a deal. Sterling also slipped against the euro.
The currency started Monday with a downbeat tone against a generally sour backdrop that saw investors selling some riskier assets on concerns over the coronavirus outbreak. The pound was also hurt by the start of trade negotiations that will probably bring renewed volatility in the currency as headlines emerge from the talks.
The UK left the EU officially on Friday evening but talks about the exact relationship between the two parties will last at least until the end of the year.
Neil Jones, head of FX sales for financial institutions at Mizuho Bank, said market concerns over a hard Brexit are coming to the fore again and putting negative pressure on the pound. Mr Johnson is due to begin negotiations with EU chief Brexit negotiator Michel Barnier in Brussels today.
“My sense is investor fears of a no-deal scenario will resurface,” he said.
Source: Economy - ft.com
