Sterling remained under selling pressure in Asian trading hours on Tuesday on growing market fears that Britain is sailing towards a damaging no-deal exit from the EU in three months’ time.
In early trading, sterling fell as much as 0.5 per cent to as low as $1.2160, as the currency continued to trade as its lowest level versus the dollar since March 2017, when the UK first triggered Article 50 and began the formal process of its divorce from the bloc. The pound had dropped as much as 1.3 per cent on Monday.
“Very few [traders] if any look willing to stand in front of this steamroller this morning,” said Stephen Innes, managing director of trading firm Vanguard Markets. Sterling was also down 0.4 per cent versus the Japanese yen to trade at ¥132.503.
The next key level to watch for the pound is $1.2106, after which the currency will breach its lowest point versus the greenback since January 2017.
“A no-deal Brexit could see cable crashing down to $1.10,” said Robert Carnell, an economist at ING, referring to pound-dollar exchange rate.
Boris Johnson, Britain’s new prime minister, insisted an abrupt exit was “absolutely not” the government’s assumption. Speaking on a trip to Scotland, he said he still believed that no-deal Brexit was a “million to one” possibility. “Provided there is sufficient goodwill …that is exactly where I would put the odds.”