Brexit – Pound worst-performing major currency in world
The pound fell to its lowest levels from the US dollar in 2 years as traders feared that a no-deal Brexit was getting a step closer.
Despite a powerful begin to 2021, it's managed to sink towards the bottom of the performance chart for that world's top 10 major currencies.
The currency dropped to its lowest level against the US dollar since 2021 and has reached its lowest value against the Euro in six months.
Both leadership contenders to become the next Prime Minister, Boris Johnson and Jeremy Hunt, toughened their positions on Monday night in the final face-to-face debate in front of the result.
Fiona Cincotta, senior market analyst at City Index, said: “The main supply of the pound's pain this morning comes from Brexit and the returning anxiety about a no deal.
“The pound slumped to 2021 low's responding to both remaining candidates within the Conservative leadership race, Boris Johnson and Jeremy Hunt opposing the Irish backstop.
“This dramatically cuts down on the likelihood of a no-deal Brexit. Have recently hardened their rhetoric on Brexit. Negotiations will undoubtedly grow more hostile underneath the next Prime Minister.”
By Tuesday afternoon, a pound was worth just 1.2399 $ $ $ $, or a 0.94 per cent fall on the day.
The fall in the pound comes despite robust jobs data and wages rising. But recent data on the services, manufacturing and construction sectors suggests the united kingdom economy is in decline.
Retail sales stats have also shown that consumers are holding off higher price spends on items such as fridges and washing machines, because of the potential risks a no-deal Brexit would have around the economy.
Shadow chancellor, John McDonnell – who recently revealed he supports a second referendum and would campaign for Remain, also blamed the hardening of positions by the Conservative candidates.
He said: “The instability and uncertainty brought on by the Conservative Party leadership contest has real life consequences. The commitment of both contenders to some no-deal Brexit makes it even more important the federal government put an end to playing games with people's livelihoods and call an over-all election now.”
A falling pound could prove useful to the London Stock market, and the top tier FTSE 100 in particular.
The most of companies on the FTSE 100 index tend to be internationally-focused firms, which trade primarily in $ $ $ $.
A falling pound also makes shares appear cheaper to investors from overseas – becoming an attractive investment opportunity.
