The ongoing fall in Sterling continues to dominate the FX headlines, with markets seemingly pricing in an increasingly high probability that the UK will exit the EU without a deal on 31st October.
The GBP/USD cross is down 2.4% in the past 24 hours, at one point today trading as low as 1.211, despite US core CPI-inflation coming in below expectations in June at 1.6% yoy. The cross is down 3.6% since Boris Johnson became prime minister five days ago and GBP/EUR has dropped below 1.10 for the first time in two years.
A senior spokesperson said yesterday that the government would not restart negotiations with the EU over a Brexit deal until the EU had agreed to drop its request for an Irish backstop while Foreign Secretary Gove said in a news article that the government’s assumption was now that the UK would leave the EU without a deal. Prime Minister Johnson has countered these views, arguing that the government’s position was that a new deal with the EU was still possible but currency markets have paid scant attention.
