Britain’s Prime Minister Boris Johnson on July 29, 2019. (Jeff J Mitchell / Pool via AP) photocredit: ASSOCIATED PRESS
Sterling slumped to a 28-month low against the U.S. dollar as the government of Boris Johnson increased the rhetoric on Brexit suggesting a “no-deal” Brexit is increasingly likely.
At 7:31 p.m. BST (2:31 p.m. EST) the level of Sterling Dollar (GBPUSD) had fallen to 1.2226, a decline of 1.25% on the day. Given GBPUSD closed on June 22, 2016 (the day before the EU referendum) at 1.4708 when the U.K. voted to leave the EU, Sterling has declined by 16.88% against the U.S. dollar since then.
To emphasize the point, since Johnson became prime minister on July 24, Sterling is the worst-performing currency in the world. Against a basket of global currencies, the Sterling Index has fallen by 2.13%.
Be in no doubt, Sterling is highly likely to book further declines as the sentiment in the market would appear to be abandoning any hope that a last-minute deal will be reached.
Michael Gove, who has been given the responsibility of preparing the U.K. to prepare for no-deal, has said the U.K. government is currently “working on the assumption” of that very outcome.
Gove wrote in The Sunday Times (July 28) that he seriously hoped the U.K. could find an accommodation with EU. However, he added that “No deal is now a very real prospect.”
What is confusing is that when visiting Scotland on July 29, the prime minister appeared to contradict Gove when he claimed the government was not working on the basis that a no-deal Brexit is the most likely outcome this autumn.
