After Boris Johnson’s landslide election victory last week, the pound soared. However, all gains were wiped out on Tuesday after goverment sources at that the Tory party said they are not planning any Brexit extension.
The pound fell by 1.35% against the euro and 1.04% against the US dollar to €1.182 and $1.319. Previously the City had expressed their concerns over a no-deal Brexit which would be catastrophic on the UK economy.
David Cheetham, chief market analyst at XTB said, “It has taken less than a week for the pound to complete a round trip, illustrating that political uncertainty has far from been eliminated and that two-way risks remain for sterling going forward.”
Neil Wilson, city analyst at Markets.com said, “I must confess to believing he wouldn’t need to be so drastic, that a large majority offered the flexibility yet strength a government craves in deal-making.
“This sets up another cliff-edge and could create yet more months of uncertainty for investors just when we thought all was squared away.”
Dean Turner, economist at UBS Wealth Management said, “The pound’s latest slide is symptomatic of the fact that Brexit is a way off being ‘done’ and will remain important for sterling over the coming months.
“The risk of the UK reverting to trading with the EU on WTO terms could still drive larger (pound) moves, particularly given the latest noises coming out of Downing Street.”