Brexit anxiety sends pound to 18-month low

The pound has fallen to an 18-month low against the dollar amid mounting uncertainty about the terms of the UK’s exit from the EU.

After reports that Theresa May is delaying Tuesday’s vote on her Brexit deal, the pound fell to $1.2656, its lowest level since June 2017.

The pound slipped to three-month lows against the euro, trading at €1.1085

The currency is seen as a barometer of the Brexit negotiations, analysts said.

“Until the market knows what will happen with respect to Brexit one way or the other then they [traders] will remain extremely anxious,” said Jane Foley, head of foreign exchange strategy at Rabobank.

Ms Foley said the threat of a hard Brexit, under which the UK leaves the EU without a deal, as well as the ongoing political uncertainty was “an extraordinary and toxic mix” for the pound.

“Once we know what is happening, things will be more settled,” she added.

Pound v dollar

This week had always been expected to be a volatile one for the pound because of the vote on Tuesday, which has also heightened political uncertainty.

Dozens of Conservative MPs had been planning to join forces with Labour, the SNP, the Lib Dems and the DUP to vote down Mrs May’s deal.

David Cheetham, chief market analyst at XTB, said that while any delay to the vote will spare the Prime Minister from a defeat, the market was reacting to the uncertainty.

“The negative reaction in the markets is more likely due to what it means for her position rather than the failure to win the vote – with even her staunchest supporters already highly sceptical as to whether the bill would pass – as it now seems increasingly likely that a long-touted leadership challenge will ensue,” he said.

Pound v euro

Mrs May will now make a statement to MPs at 15:30 GMT, which has helped sparked expectations the vote will be delayed.

Mr Wilson said there were a number of theories about what delaying the might vote might mean, ranging from new talks over the backstop or a second referendum.

“The only known is that the uncertainty has increased and we are faced with more volatility for sterling and UK assets,” Mr Wilson said.

Nadhim Zahawi, a junior minister in the Department for Education, said the Prime Minister intended to renegotiate.