THE pound tumbled against the dollar yesterday, and also weakened against the euro, as fears of a no-deal Brexit mounted.
Sterling was, at 5pm in London, trading around $1.2864, down 1.13 cents on its pre-weekend close, as doubts mounted over Prime Minister Theresa May’s ability to secure the support of the European Union, her own party and Parliament for a Brexit deal.
The dollar was meanwhile buoyed by financial market expectations of a further rise in benchmark US interest rates from the Federal Reserve.
The euro was, at 5pm in London, trading around 87.51p, up by 0.22p on its pre-weekend close against the pound, as sterling was weighed down by the Brexit fears.
Ben Broadbent, deputy governor of the Bank of England, told broadcaster CNBC yesterday that he still believed a deal was the “most likely outcome”.
Mr Broadbent said: “Our forecasts are conditioned on an assumption that there will be a deal, and in particular a transition period agreed within the withdrawal treaty that allows a smooth transition to the longer-term trading relationship.
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“So we do not make an assessment at each point in time about the likelihood of something else – it’s just a matter of assumption in the forecasts. I still think it’s the most likely outcome, but obviously over time, every day there are headlines – positive, negative – which will send the currency in particular one direction or the other.”
He added: “But for our part we have to make a particular assumption on which to condition our forecasts, that seems to me still to be the most likely outcome and that’s the one we choose.”
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Sterling was trading close to $1.50 ahead of the Brexit referendum result in June 2016.
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