Sterling languished near the year’s low this morning on the back of increasing support for Tory leadership front runner Boris Johnson, which could put Britain on a path to a no-deal Brexit.
Johnson’s campaign yesterday, 17 June got a boost in his race to succeed Theresa May as one of his former rivals and EU supporter Matt Hancock backed him. The move rattled markets as Johnson, the face of the official campaign to leave the European Union in the 2016 referendum, promised to lead the UK out of the EU with or without a deal.
The Pound tumbled to a five-and-a-half-month low of $1.2532 and last traded at $1.2536. Sterling also dropped to 1.1173 against the Euro – its lowest level since January.
The UK currency could be in for a rough ride in the coming days, with a raft of potentially market-moving data, including consumer inflation and retail sales figures, due on Wednesday and Thursday respectively, and the Bank of England’s policy announcement on Thursday.
Meanwhile, the Australian Dollar is also at its lowest levels since the flash crash in early January, having been hit by growing expectations of another rate cut and by a further slowdown in China, Australia’s largest export market.
The US-Chinese trade frictions and rising geopolitical tensions with Iran after a suspected recent attack on tankers in the Strait of Hormuz are undermining risk sentiment.
The Yen and the Euro were steadier, with investors holding out for trading clues from the Federal Reserve and the Bank of Japan’s policy-setting meetings, as well as the European Central Bank’s conference this week.
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