Pound value drops below $1.22 as May faces tough opposition at EU summit

Sterling has lost almost a fifth of its value against the dollar since the referendum in June

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The Independent Online

The pound continued its slide as Prime Minister Theresa May faced tough opposition at the EU summit.

At her first EU summit, May reiterated her hope that Britain and the European Union would have a "mature and cooperative" relationship after Britain exits.

However, she has been given a stark warning from both Angela Merkel and Francois Hollande that Britain faces a “rough” and “hard” negotiation – as she pursues a tough approach to Brexit negotiations.

Sterling continued its fall dropping below the $1.22 mark on Friday trading at $1.2197 against the dollar at market closing time.

The currency had a week of high and lows against the dollar dropping as low as $1.2150 earlier in the week, before recovering to a weekly high of $1.2320 on Wednesday.

Kathleen Brooks, of City Index, cautions that hard Brexit fears may start to materialise after the EU summit in Brussels.

How the pound has struggled since Brexit

"She has already received a chilly reception, with the President of the European Council, Donald Tusk, saying that the other 27 members of the EU will start to work separately from the UK even before we have triggered Article 50.”

“Some reports have suggested that May is not seeking a close relationship with the EU after Brexit, and her reception at the start of this summit suggests the feeling is mutual.".

Such fears could put the pound under pressure, spooking markets once again.



Brooks added that a series of tense comments around the UK’s clean break with the EU could send the pound back to $1.20 against the dollar.

Lukman Otunuga of FXTM said: "It is becoming clear that Sterling has been enveloped by political uncertainty with hard Brexit jitters ensuring prices remain depressed. Although UK data continues to point to some economic stability, Sterling may be destined for further declines as uncertainty entices bears to install repeated rounds of selling."

Sterling has lost almost a fifth of its value against the dollar since the referendum in June and is the worst-performing currency in the world this year.

The pound also hit a new six-year low against the euro on Monday.