Due to fears over Boris Johnson’s hard line on Brexit negotiations the pound is rapidly heading for its worst month in three years.
Markets are concerned over Johnson’s tough stance will place the UK on a cliff edge Brexit, on Tuesday the sterling was down by 0.5% lower against the US dollar at 1.216.
At one stage the dollar dropped by as much as 1.212, whilst the pound was 0.5% lower against the euro at 1.09.
On Monday the pound fell by 1% to its lowest level since March 2017.
Fiona Cincotta, senior market analyst at www.cityindex.co.uk said, “Investors’ main concern remains a hard no-deal Brexit which has the potential to pull the economy into chaos.
“Boris Johnson’s new Cabinet did little to alleviate those fears, taking a hard line with Europe on forthcoming negotiations.”
Craig Erlam, senior market analyst at oanda said, “The weakness in the pound is a reflection of the fact that Boris Johnson’s plan is working.
“He wants his no-deal threats to be taken seriously by the EU in the hope that it forces them to re-engage on the backstop; clearly he has traders convinced.”
He added, “It now remains to be seen whether the EU will take his threats as seriously as the market is.
“Traders are currently not optimistic but it’s still early days. For now, the currency may remain under severe pressure.”
However, Seema Shah, senior global investment strategist at Principal Global Investors said, “If it looks like this juggernaut cannot be stopped, we do expect sterling to keep falling.”
She added, “There is a widespread view that a no-deal Brexit will be stopped.”