The pound slipped to the lowest level against the euro in almost nine months amid growing concern that the UK could end up leaving the European Union with no agreement for future economic ties.
Sterling dropped for the third day versus Europe’s common currency and weakened against most of its Group-of-10 peers. UK International Trade Secretary Liam Fox said over the weekend that the risk of a no-deal Brexit had increased to as much as 60%.
The pound’s weakness versus the euro “is a clear sign that markets are starting to focus on the pound-specific risks associated with a no-deal Brexit,” said Viraj Patel, a currency strategist at ING Groep.
“The direction of travel is toward 0.90 and we’ve penciled in a 0.91 to 0.92 high over the coming months to reflect peak no-deal Brexit uncertainty.”
The British currency fell as much as 0.2% to 89.84 pence per euro, the weakest level since November 15. Against the dollar, it was little changed at $1.2934, not far from an eleven-month low of $1.2920 reached on Monday.
The yield on benchmark 10-year government bonds was steady at 1.33%.
* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER