Sterling reaches bottom of the G10 performance table as Brexit fears arise
Sterling has lost nearly 4 per cent of its value against the dollar in May, putting it at the bottom of the G10 performance table
The British pound is the worst-performing major currency this month, as concerns rose about a no-deal Brexit combined with talk of negative interest rates pushed the currency to its weakest since March.
Sterling has lost nearly 4 per cent of its value against the dollar in May, putting it at the bottom of the G10 performance table, which is a list of the most heavily traded currencies in the world.
The pound has also slipped nearly 3 per cent against the euro.
The pound hit an overnight low at $1.2073 before regaining some ground to trade at $1.2139 by Monday lunchtime in London. It is the third-weakest major currency this year, only behind the New Zealand dollar and Norwegian krone.
The pound came under renewed selling pressure at the end of last week after the third round of talks between the EU and UK’s future relationship came to a standstill.
Investors have become increasingly concerned about the lack of progress. The UK, which is in a standstill transition period until the end of the year, has previously ruled out an extension and said it would walk away from negotiations if there were no clear outline for an agreement by June.
Barclays analysts said the pound could “comfortably” trade below $1.20 by the end of June, due to Brexit risks and the weakening economy. The Bank of England has predicted the coronavirus crisis could push the UK into its worst recession for 300 years.
At the same time, discussion of negative interest rates added to the downward pressure.
The Bank of England has already reduced interest rates to their lowest level on record at 0.1 per cent and launched a bond-buying programme to lessen the economic impact of the pandemic.
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