Sterling deepens losses to drop by 1% on Brexit remarks

play article
Subscribers can listen to this article
(Photographer: Miles Willis/Bloomberg)
(Photographer: Miles Willis/Bloomberg)

The British pound extended losses Friday to drop more than one percent against the dollar after Prime Minister Boris Johnson warned that a no-deal Brexit was "very, very likely".

At about 15:12 GMT, the pound slumped by 1.2% to hit $1.3135, the lowest level since mid November, while the euro rose by 1.0% to 92.20 pence - its the highest since September.

Johnson said the chances of Britain securing a Brexit trade deal with the European Union looked to be fading, as a deadline approached on whether to keep talking.

The prime minister said he had not seen "a big offer, a big change" in the EU offer on fishing and fair competition rules, making a no-deal outcome "very, very likely" under which Britain would trade on terms established by the World Trade Organization.

The news sent the pound tumbling further to extend Thursday's steep losses.

"Already down sharply on the day, Johnson's latest warning pushed the pound below $1.3150 ... while the euro extended its advance," ThinkMarkets analyst Fawad Razaqzada told AFP.

"It looks like traders are taking no chances now as the weekend approaches.

"We may see an acceleration in selling towards the close as more (dealers) exit their trades amid fears the pound could gap lower at the Asian open on Sunday night" in Britain.

CMC Markets analyst David Madden noted that the relationship between Brussels and London appeared to have deteriorated quickly over the last 24 hours.

"The UK-EU relationship has gone from bad to worse in the past 24 hours -- and that goes for sterling too," Madden said.

"Traders are turning their back on the pound as the language being used now is more serious and a fears of a no-deal have increased considerably.

"Adding to the mix is the fact that we are approaching the weekend, and it seems that some traders are keen to and run with respect to the pound."

EU chief Ursula von der Leyen has told the bloc's leaders there were "low expectations" a deal could be struck with Britain, EU sources said.

Europe's stock markets also slumped Friday as a no-deal Brexit became a stronger possibility.

"In the past few weeks, the market consensus has gone from being reasonably confident that the EU and the UK would agree on a skinny deal -- to fearing that no deal may now be the mostly likely outcome," Rabobank analyst Jane Foley told AFP.

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
Brent Crude
All Share
Top 40
Financial 15
Industrial 25
Resource 10
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Yes, and I've gotten it.
21% - 748 votes
No, I did not.
52% - 1865 votes
My landlord refused
28% - 996 votes