The Pound hit a two-and-a-half-year low against the US Dollar and is currently trading below $1.2390. Sterling weakness, to some extent, results from seasonal factors, as it tends to happen during the British summer, but is mainly explained by what is going on in the political sphere.
The willingness to stomach a no-deal Brexit has been growing in the UK, as the political debate concerning who will be the next British Prime Minister has reduced itself to that lowest common denominator, with both candidates boasting about their readiness to walk away from the EU without a deal. It is therefore hardly surprising that the markets are stepping up preparations for what is seen as the worst possible scenario for the UK’s economy. Looking ahead to the rest of the summer, Pound risk is surely to the downside.
Photo by Kevin Grieve.
