Pound falls to 11-day low on uncertainty over Brexit deal

The pound was hit by fears over Brexit this morning, as it dropped almost one per cent against the dollar to an 11-day low.

The currency slumped by 0.94 per cent to $1.285 in the early morning, after a three-week high of $1.316 last Wednesday.

Sterling took a hit on Friday after transport minister Jo Johnson resigned from his post, calling Theresa May’s Brexit deal “a terrible mistake”, and calling for a second referendum.

“The choice being presented to the British people is no choice at all,” he said.

The country is rapidly approaching 21 November, by when Brexit secretary Dominic Raab said he expected a deal to be finalised.

Jasper Lawler, head of research at London Capital Group, said: “We expect the pound to be in for a rough ride, especially if Theresa May attempts to force her Brexit plan through. For there is growing opposition within her own government. There is a good chance that she may not come out the other side.

“The chances of a Brexit deal are diminishing rather than increasing as we approach the finishing line. Domestic political risk combined with Brexit fears will weigh heavily on the pound.

“Concrete progress in Brexit negotiations will be needed, otherwise the pound could quickly target $1.28.”

However, the president of the European Commission, Jean-Claude Juncker said yesterday a deal will be concluded within weeks.

"I have the impression that we are moving slowly but surely towards a definitive Brexit deal which should be concluded in the weeks to come," Juncker told France 24.

Sterling lifted briefly to 1.292 against the dollar after lunch, when a Financial Times report said that the EU's chief negotiator, Michel Barnier, said that the "main elements" of a Brexit text were almost ready to present to the UK cabinet tomorrow.

However, the Prime Minister's spokesperson expressed scepticism over the report.

"With even less certainty that an emergency EU summit pencilled in for some time between 18 and 21 November will take place now, markets are unlikely to position strongly for confirmation of an agreement between the UK and EU, much less one that wins cabinet backing," said Ken Odeluga, market analyst at City Index.