Sterling slides to fresh one-week low against dollar as Brexit clouds gather

The pound slid against the dollar this afternoon to hit a fresh one-week low after French President Emmanuel Macron said Britain “will be going to a no deal” if Parliament again rejects the Brexit agreement.

Sterling was down 0.8 per cent today against the dollar as traders reacted badly to continued uncertainty in the Brexit saga. It sunk to a week low of $1.307 in the afternoon from an opening price of $1.319.

The pound had picked up slightly following the Bank of England’s midday decision to keep interest rates on hold at 0.75 per cent.

But it reacted badly to comments from the EU side of Brexit negotiations throughout the day, including European Parliament Brexit coordinator Guy Verhodstadt pouring scorn on the idea of a long extension of Article 50, the mechanism by which a country can leave the EU.

Against the euro, the pound’s fall was less dramatic. It was down 0.3 per cent for the day at €1.151 at 3.30pm.

Foreign exchange strategist at Nomura, Jordan Rochester, said that Theresa May’s request for a short extension to Article 50 last night “put no-deal brinkmanship back on the table.”

“What the FX market has concluded is that things need to get a lot worse before they can get better. Folks who thought hard Brexit hedges were no longer needed next week are having a re-think,” he said.

Ken Odeluga, market analyst at City Index, pointed to the dollar side of the equation. He said: “Yesterday’s Fed-fuelled dollar sell-off has been revealed as surprisingly shallow.”

“The greenback is now regaining against majors on more measured assessments of the surprise removal of potential US rate rises this year. This by itself can put pressure on sterling, given thinned out support for the pound.”

Senior market analyst at City Index Fiona Cincotta said: “For the third time this week investors ignored solid UK economic data, distracted by Brexit drama.”