Sterling suffers morning losses as hasty Brexit looks more likely
Currency reverts to pre-election level as Boris Johnson's proposal for new bill aims to prevent further delays in negotiations
Sterling fell against both the dollar and the euro in morning trading as fears over Brexit eroded earlier post-Election gains.
By midday, the pound had fallen to pre-election levels versus the euro, dropping to 1.184, a fall of just over one per cent compared to its previous close of 1.194. On December 13, after Boris Johnson won a majority share of the votes in the UK general election, it had reached 1.207.
Sterling also languished against the US dollar, falling by more than 0.8 per cent on Tuesday morning to 1.3185 by 12.30pm. This compares to a high of 1.3474 on December 13, the day after the UK general election, and a previous close of 1.331 on Monday December 16.
While the pound didn't dip below the $1.31 mark, it showed no signs of recovering its previous ground.
Analysts said the currency had been hit after Prime Minister Boris Johnson pledged to ensure that Britain leaves the European Union by 2021. The transition period for discussions between Britain and the EU is set to conclude in December 2020. Johnson’s government is aiming to add a new clause to the Brexit bill to make it illegal for parliament to delay Brexit negotiations any longer, in order for the Prime Minister to fulfill his election promise to “get Brexit done”.
The bill is due to be voted on in the UK Parliament on Friday and if passed would mean that the Government would have just a year to negotiate a deal with the EU.
If the parties have not been able to agree by the deadline, the UK will leave on WTO terms. Some critics have pointed out that 11 months is too short a time to negotiate such an important and wide-ranging trade deal.
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