There's a 'very real chance' the slump in the pound is just getting started
- The British pound is on track for its steepest monthly decline in almost three years due to renewed fears of a no-deal Brexit.
- Sterling has dropped 9% since the start of June against the rand.
- Prime Minister Boris Johnson has vowed to pull the UK out of the European Union by the end of October, with or without a deal.
- For more visit Business Insider.
The British pound is set to record its steepest monthly decline in almost three years against the dollar due to renewed fears of a no-deal Brexit. Prime Minister Boris Johnson has vowed to pull the UK out of the European Union by the end of October, with or without a deal, and refuses to discuss a revised agreement with EU leaders unless the withdrawal treaty is reopened.
"There is now a very real chance that the pound will fall to $1.20 and even below," said Neil Wilson, chief market analyst for Markets.com. "Remember the previous post-2016 low was before no-deal was on the table - it was all talk of a hard versus soft Brexit - no deal wasn't even being discussed."
Sterling fell about 0.5% against the US dollar to $1.2154 on Tuesday. It has dropped 4.3% this month, leaving it on track for its biggest monthly drop since October 2016. The pound also fell 0.5% against the euro on Tuesday, and has shed 2.7% against the common currency over the past four trading days.
It is now down almost 3% against the rand since the start of this month, and 9% since the beginning of June.
"The pound has dropped like a hot potato, as the likelihood of a no-deal Brexit becomes increasingly plausible," said Ipek Ozkardeskaya, senior market analyst at London Capital Group. "The worst is probably being priced in right now, as the UK is sitting between two chairs and one of the chairs is about to be removed."
In 2015, before the Brexit vote, the pound reached R24.52, but by 2017 it reached R15.51.
Receive a single WhatsApp every morning with all our latest news: click here.
Also from Business Insider South Africa:
- Why Cyril Ramaphosa’s land reform panel loves individual ownership of farms – and thinks group-farming is a quick way to make people poor
- These stunning satellite images show South Africa's largest dams filling up
- Take a look: A Joburg mall built a massive aquarium in the middle of its food court
- SA's private hospitals have been hit by a mysterious and deadly fungal infection that is spreading across the globe, and no one knows how to stop it
- A major landlord just sent a worrying signal about Edgars’ future – but says the chain is actually doing fine
- There is a 90% chance Boris Johnson will break his 'no-deal' Brexit promise, according to these numbers