Brexit: 'No-deal' fears push sterling to 12-month low

Value of pound just $1.2863, down a further 0.58 per cent on the day and the weakest since August 2017

Fears of a no-deal Brexit have pushed the value of sterling below $1.29 for the first time in 12 months.

On Wednesday afternoon the value of the pound was just $1.2863, down a further 0.57 per cent on the day and the weakest since August 2017.

Sterling has now lost more than 10 per cent against the greenback since mid-April.

Against the euro, the pound was also suffering on Wednesday, dipping 0.5 per cent to €1.1097, the lowest in nine months.

The Bank of England’s decision to raise interest rates to 0.75 per cent last week has offered no support to the currency, with traders’ sentiment dominated instead by rising fears that the UK could crash out of the EU next March without a withdrawal agreement.

At the weekend the international trade secretary, Liam Fox, claimed that the probability of no deal being agreed by next March – something businesses and economists warn would have disastrous consequences – is now higher than 50 per cent.

Dipping below $1.29

Reuters Eikon

“We remain bearish on the pound in the short term until the Brexit mess is out the way and look for the currency to enter a $1.27-1.28 range before the leaders’ summit in September,” said Nomura strategist Jordan Rochester.

“A lot of companies can’t wait for the [Brexit] negotiations outcome in October, so of course are trying to hedge against a drop in the pound,” said Christophe Barraud, a strategist at Market Securities in Paris.

The Bank of England has said that its expectations of further interest rate rises over the coming year are based on the assumption of a “smooth” Brexit.

But the bank’s governor, Mark Carney, noted last week that the risk of no deal was still “uncomfortably high”.